LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(unaudited)

Three months ended

Nine months ended

September 30,

September 30,

2017

2016

2017

2016

(amounts in thousands, except per share amounts)

Revenue

$
3,430

20,616

9,643

27,413

Operating costs and expenses

Operating, including stock-based compensation (note 7)

646

782

1,968

2,099

Selling, general and administrative, including stock-based compensation (note 7)

6,189

9,855

18,099

27,792

Research and development, including stock-based compensation (note 7)

1,440

2,384

6,214

8,040

Depreciation and amortization

942

971

2,844

2,935

9,217

13,992

29,125

40,866

Operating income (loss)

(5,787)

6,624

(19,482)

(13,453)

Other income (expense):

Interest expense

(5,518)

(4,090)

(14,899)

(10,547)

Dividend and interest income

422

190

1,219

4,697

Share of earnings (losses) of affiliates (note 4)

(5,280)

19,046

25,109

570,178

Realized and unrealized gains (losses) on financial instruments, net (note 3)

2,675

—

5,026

92,990

Gain (loss) on dilution of investment in affiliate (note 4)

(3,718)

(16,331)

(42,515)

760,074

Other, net

9

5

11

112

Net earnings (loss) before income taxes

(17,197)

5,444

(45,531)

1,404,051

Income tax benefit (expense)

7,333

(1,655)

18,245

(532,349)

Net earnings (loss) attributable to Liberty Broadband shareholders

$
(9,864)

3,789

(27,286)

871,702

Basic net earnings (loss) attributable to Series A, Series B and Series C Liberty Broadband shareholders per common share (note 2)

$
(0.05)

0.02

(0.15)

6.13

Diluted net earnings (loss) attributable to Series A, Series B and Series C Liberty Broadband shareholders per common share (note 2)

$
(0.05)

0.02

(0.15)

6.10


	Three months ended			Nine months ended
	September 30,			September 30,
	2020		2019	2020	2019

	(amounts in thousands)
Net earnings (loss)	$	68,960	27,496	133,332	25,247
Other comprehensive earnings (loss), net of taxes:
Comprehensive earnings (loss) attributable to debt credit risk adjustments		(11,552)	—	(11,552)	—
Other comprehensive earnings (loss), net of taxes		(11,552)	—	(11,552)	—
Comprehensive earnings (loss) attributable to Liberty Broadband shareholders	$	57,408	27,496	121,780	25,247

See accompanying notes to the condensed consolidated financial statements.

~~I-3~~I-4

Table of Contents

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of ~~Comprehensive Earnings (Loss)~~Cash Flows

(unaudited)


	Nine months ended
	September 30,
	2020		2019

	(amounts in thousands)
Cash flows from operating activities:
Net earnings (loss)	$	133,332	25,247
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization		1,041	1,408
Stock-based compensation		5,736	7,670
Share of (earnings) losses of affiliates, net		(408,396)	(141,882)
(Gain) loss on dilution of investment in affiliate		140,610	68,944
Realized and unrealized (gains) losses on financial instruments, net		39,324	433
Deferred income tax expense (benefit)		47,183	8,474
Other, net		1,070	1,016
Changes in operating assets and liabilities:
Current and other assets		244	(927)
Payables and other liabilities		3,044	2,385
Net cash provided (used) by operating activities		(36,812)	(27,232)
Cash flows from investing activities:
Capital expended for property and equipment		(42)	(75)
Exercise of preemptive right to purchase Charter shares		(14,910)	—
Net cash provided (used) by investing activities		(14,952)	(75)
Cash flows from financing activities:
Borrowings of debt		700,000	50,000
Repurchases of Liberty Broadband common stock		(285,722)
Payments from issuances of financial instruments		—	(46,330)
Payment to former parent under tax sharing agreement related to net settlement of Awards		—	(16,090)
Taxes paid in lieu of shares issued for stock-based compensation		(2,121)	—
Other financing activities, net		(9,849)	3,170
Net cash provided (used) by financing activities		402,308	(9,250)
Net increase (decrease) in cash		350,544	(36,557)
Cash, cash equivalents and restricted cash, beginning of period		49,724	83,103
Cash, cash equivalents and restricted cash, end of period	$	400,268	46,546

~~(unaudited)~~

Three months ended

Nine months ended

September 30,

September 30,

2017

2016

2017

2016

(amounts in thousands)

Net earnings (loss)

$
(9,864)

3,789

(27,286)

871,702

Other comprehensive earnings (loss), net of taxes:

Unrealized holding gains (losses) arising during the period

—

—

—

(221)

Share of other comprehensive earnings (loss) of equity method affiliates

260

247

634

811

Other

—

—

—

(1,839)

Other comprehensive earnings (loss), net of taxes

260

247

634

(1,249)

Comprehensive earnings (loss) attributable to Liberty Broadband shareholders

$
(9,604)

4,036

(26,652)

870,453

See accompanying notes to the condensed consolidated financial statements.

~~I-4~~I-5

Table of Contents

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of ~~Cash Flows~~Equity

(unaudited)


							Accumulated
						Additional	other
	Preferred		Common stock			paid-in	comprehensive	Retained
	Stock		Series A	Series B	Series C	capital	earnings	earnings	Total equity

	(amounts in thousands)
Balance at January 1, 2020	$	—	265	25	1,529	7,890,084	8,158	2,767,885	10,667,946
Net earnings (loss)		—	—	—	—	—	—	133,332	133,332
Other comprehensive loss		—	—	—	—	—	(11,552)	—	(11,552)
Stock-based compensation		—	—	—	—	5,684	—	—	5,684
Issuance of common stock upon exercise of stock options		—	—	—	1	25	—	—	26
Withholding taxes on net share settlements of stock-based compensation		—	—	—	—	(2,121)	—	—	(2,121)
Series C Liberty Broadband stock repurchases		—	—	—	(20)	(285,702)	—	—	(285,722)
Noncontrolling interest activity at Charter		—	—	—	—	(20,343)	—	—	(20,343)
Balance at September 30, 2020	$	—	265	25	1,510	7,587,627	(3,394)	2,901,217	10,487,250

~~(unaudited)~~


							Accumulated
						Additional	other
	Preferred		Common stock			paid-in	comprehensive	Retained
	Stock		Series A	Series B	Series C	capital	earnings	earnings	Total equity

	(amounts in thousands)
Balance at June 30, 2020	$	—	265	25	1,530	7,878,499	8,158	2,832,257	10,720,734
Net earnings (loss)		—	—	—	—	—	—	68,960	68,960
Other comprehensive loss		—	—	—	—	—	(11,552)	—	(11,552)
Stock-based compensation		—	—	—	—	1,979	—	—	1,979
Series C Liberty Broadband stock repurchases		—	—	—	(20)	(285,702)	—	—	(285,722)
Noncontrolling interest activity at Charter		—	—	—	—	(7,149)	—	—	(7,149)
Balance at September 30, 2020	$	—	265	25	1,510	7,587,627	(3,394)	2,901,217	10,487,250

Nine months ended

September 30,

2017

2016

(amounts in thousands)

Cash flows from operating activities:






Net earnings (loss)

$
(27,286)

871,702

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

Depreciation and amortization

2,844

2,935

Stock-based compensation

4,376

4,582

Share of (earnings) losses of affiliates

(25,109)

(570,178)

(Gain) loss on dilution of investment in affiliate

42,515

(760,074)

Realized and unrealized (gains) losses on financial instruments, net

(5,026)

(92,990)

Deferred income tax expense (benefit)

(18,259)

533,626

Other, net

1,080

112

Changes in operating assets and liabilities:

Current and other assets

(1,455)

7,954

Payables and other liabilities

2,724

(2,702)

Net cash provided (used) by operating activities

(23,596)

(5,033)

Cash flows from investing activities:

Capital expended for property and equipment

(27)

(154)

Purchases of short term investments and other marketable securities

—

(155,444)

Sales of short term investments and other marketable securities

—

164,458

Investment in equity method affiliate

—

(5,000,000)

Other investing activities, net

14

453

Net cash provided (used) by investing activities

(13)

(4,990,687)

Cash flows from financing activities:

Borrowings of debt

500,000

200,000

Repayments of debt

(600,000)

—

Cash received from issuance of Series C Liberty Broadband common stock

—

4,400,000

Payments from issuances of financial instruments

(101,638)

—

Proceeds from settlements of financial instruments

155,683

—

Other financing activities, net

(739)

(318)

Net cash provided (used) by financing activities

(46,694)

4,599,682

Net decrease in cash

(70,303)

(396,038)

Cash and cash equivalents, beginning of period

205,728

655,079

Cash and cash equivalents, end of period

$
135,425

259,041

See accompanying notes to the condensed consolidated financial statements.

~~I-5~~I-6

Table of Contents

LIBERTY BROADBAND CORPORATION

Condensed Consolidated ~~Statement~~Statements of Equity (continued)

(unaudited)


							Accumulated
						Additional	other
	Preferred		Common stock			paid-in	comprehensive	Retained
	Stock		Series A	Series B	Series C	capital	earnings	earnings	Total equity

	(amounts in thousands)
Balance at January 1, 2019	$	—	263	25	1,526	7,938,357	7,778	2,650,669	10,598,618
Net earnings (loss)		—	—	—	—	—	—	25,247	25,247
Stock-based compensation		—	—	—	—	7,515	—	—	7,515
Issuance of common stock upon exercise of stock options		—	1	—	1	4,418	—	—	4,420
Tax sharing arrangement with former parent		—	—	—	—	(16,090)	—	—	(16,090)
Noncontrolling interest activity at Charter		—	—	—	—	(7,538)	—	—	(7,538)
Balance at September 30, 2019	$	—	264	25	1,527	7,926,662	7,778	2,675,916	10,612,172


							Accumulated
						Additional	other
	Preferred		Common stock			paid-in	comprehensive	Retained
	Stock		Series A	Series B	Series C	capital	earnings	earnings	Total equity

	(amounts in thousands)
Balance at June 30, 2019	$	—	264	25	1,527	7,929,046	7,778	2,648,420	10,587,060
Net earnings (loss)		—	—	—	—	—	—	27,496	27,496
Stock-based compensation		—	—	—	—	2,505	—	—	2,505
Issuance of common stock upon exercise of stock options		—	—	—	—	265	—	—	265
Noncontrolling interest activity at Charter		—	—	—	—	(5,154)	—	—	(5,154)
Balance at September 30, 2019	$	—	264	25	1,527	7,926,662	7,778	2,675,916	10,612,172

~~(unaudited)~~

Accumulated

Additional

other

Preferred

Common stock

paid-in

comprehensive

Retained

Stock

Series A

Series B

Series C

capital

earnings

earnings

Total equity

(amounts in thousands)

Balance at January 1, 2017

$
—

262

25

1,530

7,945,883

7,656

517,736

8,473,092

Net earnings (loss)

—

—

—

—

—

—

(27,286)

(27,286)

Other comprehensive earnings

—

—

—

—

—

634

—

634

Stock-based compensation

—

—

—

—

4,017

—

—

4,017

Issuance of common stock upon exercise of stock options

—

—

—

1

2,416

—

—

2,417

Cumulative effect of accounting change at Charter (note 4)

—

—

—

—

—

—

17,361

17,361

Balance at September 30, 2017

$
—

262

25

1,531

7,952,316

8,290

507,811

8,470,235

See accompanying notes to the condensed consolidated financial statements.

~~I-6~~I-7

Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1) Basis of Presentation

During May 2014, the board of directors of Liberty Media Corporation and its subsidiaries (“Liberty”) authorized management to pursue a plan to spin-off to its stockholders common stock of a wholly-owned subsidiary, Liberty Broadband Corporation (“Liberty Broadband” or the “Company”), and to distribute subscription rights to acquire shares of Liberty ~~Broadband Series C~~Broadband’s common stock (the “Broadband Spin-Off”). At the time of the Broadband Spin-Off, Liberty Broadband was comprised of (i) Liberty’s former interest in Charter Communications, Inc. (“Legacy Charter”), (ii) Liberty’s former wholly-owned subsidiary TruePosition, Inc., (iii) Liberty’s former minority equity investment in Time Warner Cable, Inc. (“Time Warner Cable”), (iv) certain deferred tax liabilities, as well as liabilities related to Time Warner Cable written call options and (v) initial indebtedness, pursuant to margin loans entered into prior to the completion of the Broadband Spin-Off. These financial statements refer to ~~the combination of the aforementioned subsidiary, investments, and financial instruments~~Liberty Broadband Corporation as “Liberty Broadband,” “the Company,” “us,” “we” and “our” in the notes to the condensed consolidated financial statements.

~~On May 18, 2016, Time Warner Cable merged~~Through a number of prior years’ transactions, Liberty Broadband has acquired an interest in Charter Communications, Inc. (“Charter”). Pursuant to proxy agreements with ~~Legacy Charter (the “Time Warner Cable Merger”~~GCI Liberty, Inc. (“GCI Liberty”). In connection with the Time Warner Cable Merger, Legacy Charter underwent a corporate reorganization, resulting in CCH I, LLC (“Charter”), a former subsidiary of Legacy Charter, becoming the new publicly traded parent company. Also on May 18, 2016, the previously announced acquisition of Bright House Networks, LLC from and Advance/Newhouse Partnership (“A/N”) by Charter (the “Bright House Transaction”) was completed. In connection with the Time Warner Cable Merger and Bright House Transaction, Liberty Broadband entered into certain agreements with Legacy Charter, Charter (for accounting purposes a related party of the Company), Liberty Interactive Corporation (“Liberty Interactive,” for accounting purposes a related party of the Company) and Time Warner Cable. As a result of the Time Warner Cable Merger and Bright House Transaction (collectively, the “Transactions”), Liberty Broadband exchanged its shares of Time Warner Cable for shares of Charter and purchased additional shares of Charter. As a result, and pursuant to proxy agreements entered into with Liberty Interactive and A/N, Liberty Broadband controls 25.01% of the aggregate voting power of Charter. ~~See note 4 for additional detail regarding these transactions and corresponding agreements.~~

The Company’s wholly owned subsidiary, Skyhook Holding, Inc. ~~(formerly known as TruePosition, Inc.~~(“Skyhook”), was originally incorporated to provide technology for locating wireless phones and other mobile devices through a passive network overlay system using its patented U-TDOA technology (“U-TDOA service”). In February 2014, Skyhook Holding, Inc. acquired 100% of the outstanding common shares of Skyhook Wireless, Inc., which operates a global location network containing billions of geolocated Wi-Fi access points and cell towers that serve as the reference infrastructure for providing location services. In 2015, one of Skyhook Holding, Inc.’s customers, a wireless carrier utilizing the legacy U-TDOA service which accounted for approximately 80% - 90% of consolidated revenue at the time, gave notice that it planned to discontinue use of the U-TDOA service and did not intend to renew its contract, which expired on December 31, 2015. The loss of this customer had a material adverse effect on Skyhook Holding, Inc.’s business. As a result of the loss of this wireless carrier customer, further changes in the regulatory environment and a shift in the overall market for the legacy U-TDOA service, Skyhook Holding, Inc. ceased making further investment in its U-TDOA products. In 2016, Skyhook Holding, Inc. and Skyhook Wireless, Inc. combined operations in order to focusfocuses on the development and sale of Skyhook’s device-based location technology. Skyhook markets and sells 2 primary products: (1) a location determination service called the ~~suite of~~Precision Location Solution; and (2) a location intelligence and ~~context products, and are referred to collectively herein as “Skyhook.”~~data insights service called Geospatial Insights.

The accompanying (a) condensed consolidated balance sheet as of December 31, ~~2016,~~2019, which has been derived from audited financial statements, and (b) interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. The results of operations for any interim period are not necessarily indicative of results for the full year. Additionally, certain prior period amounts have been reclassified for comparability with current period presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in Liberty Broadband's Annual Report on

~~I-7~~

~~Table of Contents~~

~~LIBERTY BROADBAND CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

Form 10-K for the year ended December 31, ~~2016.~~2019. All significant intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company considers ~~(i)~~ the application of the equity method of accounting for investments in affiliates ~~(ii) the fair value of non-financial instruments, (iii) the fair value of financial instruments, (iv) revenue recognition~~ and ~~(v)~~ accounting for income taxes to be its most significant estimates.

In ~~February 2016,~~December 2019, Chinese officials reported a novel coronavirus outbreak (“COVID-19”). COVID-19 has since spread through China and internationally. On March 11, 2020, the ~~Financial Accounting Standards Board (the “FASB”) issued new accounting guidance on lease accounting. This guidance requires~~World Health Organization assessed COVID-19 as a ~~company~~global pandemic, causing many countries throughout the world to ~~recognize lease assets~~take aggressive actions, including imposing travel restrictions and ~~lease liabilities~~stay-at-home orders, closing public attractions and restaurants, and mandating social distancing practices.

We are not presently aware of any events or circumstances arising from ~~operating leases~~the COVID-19 pandemic that would require us to update our estimates or judgments or revise the carrying value of our assets or liabilities. Our estimates may change, however, as new events occur and additional information is obtained, and any such changes will be recognized in the statement of financial position. The new guidance also simplifies the accounting for sale and leaseback transactions. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. We plan to adopt this guidance on January 1, 2019. Companies are required to use a modified retrospective approach to adopt this guidance. The Company is currently working with its consolidated subsidiary, Skyhook, to evaluate the impact of the adoption of this new guidance on our consolidated financial ~~statements, including identifying the population of leases, evaluating technology solutions~~statements. Actual results could differ from estimates, and ~~collecting lease data.~~

~~In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers. The new guidance requires an entity~~any such differences may be material to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This new guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In March 2016, the FASB issued additional guidance which clarifies principal versus agent considerations, and in April 2016, the FASB issued further guidance which clarifies the identification of performance obligations and the implementation guidance for licensing. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either a full retrospective or modified retrospective transition method. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company anticipates adopting this guidance under the modified retrospective transition method. Skyhook has substantially completed the review of its revenue arrangements and does not currently expect that the adoption of the new standard will have a material impact on itsour financial position or results of operations. Additionally, Charter, which is accounted for as an equity method investment, has substantially completed its review of its revenue arrangements and does not currently expect that the adoption of the new standard will have a material impact on its financial position or results of operations.statements.

Liberty Broadband holds an investment in Charter that is accounted for using the equity method. Liberty Broadband does not control the decision making process or business management practices of this affiliate. Accordingly, Liberty Broadband relies on the management of this affiliate to provide it with accurate financial information prepared in accordance with GAAP that the Company uses in the application of the equity method. In addition, Liberty Broadband relies on audit

I-8

Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

of these instruments as reported on our condensed consolidated balance sheets. The carrying value of our long-term debt under the Margin Loan Facility (as defined in note 5 to the accompanying condensed consolidated financial statements) bears interest at a variable rate and therefore is also considered to approximate fair value.

~~I-10~~

~~Table of Contents~~

~~LIBERTY BROADBAND CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

Realized and Unrealized Gains (Losses) on Financial Instruments

Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:


	Three months ended			Nine months ended
	September 30,			September 30,
	2020		2019	2020		2019

	(amounts in thousands)
Derivative instruments (1)	$	—	(433)		—	(433)
Exchangeable senior debentures (2)		(39,324)	NA		(39,324)	NA
	$	(39,324)	(433)		(39,324)	(433)

Three months ended

Nine months ended

September 30,

September 30,

2017

2016

2017

2016

(amounts in thousands)

Time Warner Cable investment (1)

$
—

—

—

92,990

Derivative instruments (2)

2,675

—

5,026

—

$
2,675

—

5,026

92,990

(1)

~~As discussed in note 4, Time Warner Cable merged with Charter on May 18, 2016. Therefore~~In September 2019, the Company ~~no longer has an investment in Time Warner Cable as of May 18, 2016, and the unrealized gain (loss) related to our investment in Time Warner Cable is recorded through this date.~~ ~~In connection with the merger, the Company exchanged, in~~entered into a ~~tax-free transaction, its shares of Time Warner Cable for shares of Charter Class A common stock~~.

~~(2)~~

~~As of December 31, 2016, the Company had an outstanding~~ zero-strike call option on ~~704,908~~460,675 shares of Liberty Broadband Series C common stock ~~which the Company exercised in March 2017. In April 2017, the Company entered into another zero-strike call option on 600,242 shares of Liberty Broadband Series C common stock. The Company~~and prepaid a premium of ~~$50.0 million in April 2017. Upon expiration in June 2017, the call option was rolled~~$46.3 million.

(2)

The Company has elected to account for its exchangeable senior debentures entered into ~~a new zero-strike call option on 600,242 shares of Liberty Broadband Series C common stock. Liberty Broadband exercised its option to settle the contract in cash~~ in August ~~2017 for cash proceeds~~2020 using the fair value option. Changes in the fair value of ~~$53.8 million.~~the exchangeable senior debentures recognized in the condensed consolidated statements of operations are primarily due to market factors driven by changes in the fair value of the underlying shares into which debt is exchangeable. The Company ~~realized gains on~~isolates the ~~options outstanding~~portion of the unrealized gain (loss) attributable to the change in the instrument specific credit risk and ~~settled during~~recognizes such amount in other comprehensive income. The change in the fair value of the exchangeable senior debentures attributable to changes in the instrument specific credit risk before tax was a loss of $15.3 million for the three and nine months ended September 30, ~~2017.~~

2020.

(4) Investment in Charter Accounted for Using the Equity Method

~~In May 2013,~~Through a number of prior years’ transactions, Liberty Broadband has acquired approximately 26.9 million shares of Legacy Charter common stock and approximately 1.1 million warrants to purchase shares of Legacy Charter common stock for approximately $2.6 billion, which represented an ~~approximate 27% beneficial ownership (including the warrants on an as if converted basis)~~interest in Legacy Charter at the time of purchase and price per share of $95.50. Liberty funded the purchase with a combination of cash on hand of approximately $1.2 billion and new margin loan arrangements. Liberty allocated the purchase price between the shares of common stock and the warrants acquired in the transaction by determining the fair value of the publicly traded warrants and allocating the remaining balance to the shares acquired, which resulted in an initial excess basis in the investment of $2,532 million.Charter. The investment in ~~Legacy~~ Charter is accounted for as an equity method affiliate based on ~~the~~our voting and ownership interest ~~obtained~~ and the board seats held by individuals appointed by ~~Liberty.~~

~~During May 2014,~~ Liberty ~~purchased 897 thousand Legacy Charter shares for approximately $124.5 million. During November 2014, subsequent to~~Broadband. As of September 30, 2020, the ~~Broadband Spin-Off,~~carrying and market value of Liberty ~~Broadband exercised all of its outstanding warrants to purchase shares of Legacy Charter common stock for approximately $52 million.~~

On May 18, 2016, the Time Warner Cable Merger was completed, which resulted in Legacy Charter and Time Warner Cable becoming wholly owned subsidiaries of Charter. Also on May 18, 2016, the previously announced Bright House Transaction was completed. In connection with these transactions, Legacy Charter underwent a corporate reorganization, resultingBroadband’s ownership in Charter ~~a former subsidiary of Legacy Charter, becoming the new publicly traded parent company. In connection with the Time Warner Cable Merger~~was approximately $12,450 million and ~~the Bright House Transaction,~~$33,781 million, respectively. Liberty ~~Broadband completed the previously announced transactions described below:~~

~~I-11~~

~~Table of Contents~~

~~LIBERTY BROADBAND CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~Transactions Completed in Connection with the Time Warner Cable Merger~~

~~Charter Investment Agreement~~

~~On May 18, 2016, Liberty Broadband completed its previously announced investment~~Broadband’s ownership in Charter in accordance with the investment agreement dated May 23, 2015 by and among Liberty Broadband, Legacy Charter and Charter (the “Charter Investment Agreement”). Pursuant to the Charter Investment Agreement, immediately following the consummationis 27.1% of the ~~Time Warner Cable Merger, Liberty Broadband purchased from Charter $4.3 billion of shares~~outstanding equity of Charter ~~Class A common stock, par value $0.001 per share, at a price per share~~as of $195.70 following adjustment by the applicable exchange ratio. As a result, Liberty Broadband received approximately 22.0 million shares of Charter Class A common stock. Liberty Broadband funded its purchase of these shares of Charter Class A common stock with proceeds from the issuance of Liberty Broadband Series C common stock.

~~Charter Contribution Agreement~~

Also on May 18, 2016, shares of Time Warner Cable common stock held by Liberty Broadband and Liberty Interactive were exchanged, in a tax-free transaction, for shares of Charter Class A common stock which resulted in each of Liberty Broadband and Liberty Interactive receiving one share of Charter Class A common stock for each share of Time Warner Cable common stock so exchanged. In the exchange, Liberty Broadband received approximately 2.4 million shares of Charter Class A common stock, with a fair value of $531.9 million.

~~Liberty Interactive Proxy Agreement~~September 30, 2020.

Pursuant to ~~the Proxy~~proxy agreements with GCI Liberty and ~~Right of First Refusal Agreement, dated May 23, 2015, as amended~~A/N (the ~~“Liberty Interactive Proxy Agreement”)~~“GCI Liberty Proxy” and “A/N Proxy”, ~~by and between~~respectively), Liberty Broadband ~~and Liberty Interactive, Liberty Interactive granted Liberty Broadband~~has an irrevocable proxy to vote ~~all~~certain shares of Charter common stock owned beneficially or of record by GCI Liberty ~~Interactive following the closing of the Time Warner Cable Merger,~~and A/N, for a five year term expiring May 18, 2021, subject to extension upon the mutual agreement of both parties, subject to certain limitations. ~~So long as~~

Liberty Broadband’s overall voting interest (24.0% at September 30, 2020) is diluted by the ~~Liberty Interactive Proxy Agreement is~~outstanding A/N interest in ~~effect, Liberty Broadband also has~~ a ~~right of first refusal (“ROFR”) to purchase all or a portion of any shares~~subsidiary of Charter ~~common stock which Liberty Interactive proposes to transfer, subject to certain limitations.~~

~~Transactions Completed~~because the A/N interest has voting rights in ~~Connection with the Bright House Transaction~~

~~Second Amended and Restated Stockholders Agreement~~

On May 18, 2016, pursuant to the Stockholders Agreement, upon the closing of the Bright House Transaction, Liberty Broadband purchased from Charter approximately 3.7 million additional shares of Charter Class A common stock at a price per share of $191.33 following adjustment by the applicable exchange ratios, for an aggregate purchase price of $700 million. Liberty Broadband funded its $700 million purchase in shares of Charter through cash on hand and margin loan draws, as discussed in note 6.

~~Proxy and Right of First Refusal Agreement~~

In connection with the Bright House Transaction, on May 18, 2016, A/N and Liberty Broadband entered into a proxy and right of first refusal agreement, as amended (“A/N Proxy”), pursuant to which A/N granted Liberty Broadband a five-year proxy to vote shares of Charter held by A/N, capped at a number of shares representing 7% of the voting power of Charter’s outstanding shares.Charter. As a result of the A/N Proxy and the GCI Liberty ~~Interactive~~ Proxy, ~~Agreement,~~ Liberty Broadband controls 25.01% of the aggregate voting power of Charter ~~following the completion of the Time Warner Cable Merger and the Bright House Transaction~~ and is Charter’s largest stockholder.

Liberty Broadband’s equity ownership in Charter (on a fully diluted basis) is capped at the greater of 26% or the cap on its voting interest. Liberty Broadband’s voting interest in Charter is capped at the greater of (x) 25.01% (or 0.01% above the person or group holding the highest voting percentage of Charter) and (y) 23.5% increased 1-for-one to a maximum of

~~I-12~~I-11

Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

35% for each permanent reduction in A/N’s equity interest in Charter below 15%. As of September 30, 2020, Liberty Broadband does not believe it has exceeded the cap on its equity ownership in Charter.

SoAdditionally, so long as the A/N Proxy is in effect, if A/N proposes to transfer common units of Charter Communications Holdings, LLC (which units are exchangeable into Charter shares and which will, under certain circumstances, result in the conversion of certain shares of ~~Class~~Charter class B ~~Common Stock~~common stock into Charter shares) or Charter shares, in each case, constituting either (i) shares representing the first 7.0% of the outstanding voting power of Charter held by A/N or (ii) shares representing the last 7.0% of the outstanding voting power of Charter held by A/N, Liberty Broadband will have a ~~ROFR~~right of first refusal (“ROFR”) to purchase all or a portion of any such securities A/N proposes to transfer. The purchase price per share for any securities sold to Liberty Broadband pursuant to the ROFR will be the volume-weighted average price of Charter shares for the two trading day period before the notice of a proposed sale by A/N, payable in cash. Certain transfers are permitted to affiliates of A/N, subject to the transferee entity entering into an agreement assuming the transferor’s obligations under the A/N Proxy.

~~Investment in Charter~~

~~For discussion purposes~~During the ~~term “Charter” will be used~~nine months ended September 30, 2020, Liberty Broadband exercised its preemptive right to ~~discuss both our previous and current holdings in Legacy Charter and Charter. It is noted that the ticker symbol for the~~purchase an aggregate of approximately 35 thousand shares of Charter’s Class A common stock for an aggregate purchase price of ~~each of Legacy Charter and Charter are the same, and that in connection with the Time Warner Cable Merger, Legacy Charter underwent a corporate reorganization, resulting~~$14.9 million.

Investment in Charter ~~a former subsidiary of Legacy Charter, becoming the new publicly traded parent company.~~

As of September 30, 2017, the carrying value of Liberty Broadband’s ownership in Charter was approximately $9,327 million. The market value of Liberty Broadband’s ownership in Charter as of September 30, 2017 was approximately $19,651 million, which represented an approximate economic ownership of 22% of the outstanding equity of Charter as of that date.

The excess basis ~~is $2,100~~in our investment in Charter of $5,167 million as of September 30, ~~2017 and has been~~2020 is allocated within memo accounts used for equity accounting purposes as follows (amounts in millions):


		September 30,	December 31,
		2020	2019
Property and equipment	$	307	225
Customer relationships		1,381	1,043
Franchise fees		2,402	1,996
Trademarks		29	29
Goodwill		2,182	1,630
Debt		(144)	(9)
Deferred income tax liability		(990)	(817)
	$	5,167	4,097

Property and equipment

$
174

Customer relationships

346

Franchise fees

1,170

Trademarks

29

Goodwill

1,046

Debt

(20)

Deferred income tax liability

(645)

$
2,100

~~Upon acquisition, Liberty Broadband ascribed remaining useful lives of 7 years and 13 years to property~~Property and equipment and customer relationships have weighted average remaining useful lives of approximately 5 years and 9 years, respectively, and ~~indefinite lives to~~ franchise fees, trademarks and ~~goodwill.~~goodwill have indefinite lives. The excess basis of outstanding debt is amortized over the contractual period using the ~~effective interest rate~~straight-line method. The increase in excess basis for the nine months ended September 30, ~~2017,~~2020 was primarily due to Charter’s share buyback program. The Company’s ~~Share~~share of earnings (losses) of affiliates line item in the accompanying condensed consolidated statements of operations includes expenses of ~~$15.3~~$25.5 million and ~~$18.5~~$32.7 million, net of related taxes, for the three months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively, and expenses of ~~$44.0~~$107.3 million and ~~$23.2~~$88.7 million, net of related taxes, for the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively, due to the amortization of the excess basis related to assets with identifiable useful lives and debt.

The Company had a dilution loss of ~~$3.7~~$35.3 million and ~~$16.3~~$11.2 million during the three months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively, and a dilution loss of ~~$42.5~~$140.6 million and ~~a dilution gain of $760.1~~$68.9 million during the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively. The dilution ~~gain~~losses for the nine months ended September 30, 2016 is primarily attributable to Liberty Broadband’s investment basis in Charter at a price per share below the new equity issued in the Time Warner Cable Merger. The dilution losses during the other periods presented ~~are~~were attributable to stock option exercises by employees and other third parties at prices below Liberty Broadband’s book basis per share.

~~I-13~~I-12

Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

~~Accounting Change~~

Charter adopted Accounting Standards Update (“ASU”) 2016-09 on January 1, 2017. Upon adoption of ASU 2016-09, Charter recognized excess tax benefits of approximately $136 million in deferred tax assets that were previously not recognized in a cumulative-effect adjustment to retained earnings. The impact of this entry on the Company’s equity is reflected in the line item Cumulative effect of accounting change at Charter in the accompanying condensed consolidated statement of equity.

Summarized unaudited financial information for Charter is as follows (amounts in millions):

Charter condensed consolidated balance sheets


	September 30, 2017		December 31, 2016

				September 30, 2020		December 31, 2019
Current assets	$	4,132	3,300	$	4,063	6,537
Property and equipment, net		33,300	32,963		34,196	34,591
Goodwill		29,554	29,509		29,554	29,554
Intangible assets, net		79,905	81,924		73,372	74,775
Other assets		1,337	1,371		3,008	2,731
Total assets	$	148,228	149,067	$	144,193	148,188
Current liabilities		10,419	9,572		10,256	12,385
Deferred income taxes		26,576	26,665		17,929	17,711
Long-term debt		66,064	59,719		77,947	75,578
Other liabilities		2,591	2,745		4,349	3,703
Equity		42,578	50,366		33,712	38,811
Total liabilities and shareholders’ equity	$	148,228	149,067	$	144,193	148,188

Charter condensed consolidated statements of operations


	Three months ended			Nine months ended
	September 30,			September 30,
	2017		2016	2017	2016

						Three months ended			Nine months ended
						September 30,			September 30,
						2020		2019	2020	2019
Revenue	$	10,458	10,037	30,979	18,728	$	12,039	11,450	35,473	34,003
Cost and expenses:
Operating costs and expenses (excluding depreciation and amortization)		(6,703)	(6,482)	(19,857)	(12,157)		7,483	7,435	22,212	21,915
Depreciation and amortization		(2,701)	(2,437)	(7,846)	(4,412)		2,370	2,415	7,295	7,465
Other operating expenses, net		(145)	(207)	(374)	(776)
		(9,549)	(9,126)	(28,077)	(17,345)
Other operating (income) expenses, net							14	14	23	71
							9,867	9,864	29,530	29,451
Operating income		909	911	2,902	1,383		2,172	1,586	5,943	4,552
Interest expense, net		(788)	(724)	(2,250)	(1,771)		(946)	(963)	(2,883)	(2,833)
Other income (expense), net		(3)	79	(55)	429		(117)	(30)	(413)	(220)
Income tax benefit (expense)		(26)	(16)	(99)	3,135		(177)	(126)	(372)	(329)
Net income (loss)		92	250	498	3,176		932	467	2,275	1,170
Less: Net income attributable to noncontrolling interests		(44)	(61)	(156)	(108)		(118)	(80)	(299)	(216)
Net income (loss) attributable to Charter shareholders	$	48	189	342	3,068	$	814	387	1,976	954

~~I-14~~I-13

Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

(5) Debt

~~(5) Goodwill and Other Intangible Assets~~

~~There were no changes in the carrying amount of goodwill during the nine months ended September 30, 2017.~~

~~Intangible assets subject to amortization are comprised of the following (amounts in thousands):~~

September 30, 2017

December 31, 2016

Gross

Net

Gross

Net

Carrying

Accumulated

Carrying

Carrying

Accumulated

Carrying

Amount

Amortization

Amount

Amount

Amortization

Amount

Acquired patents

$
10,823

(9,633)

1,190

10,823

(8,450)

2,373

Customer relationships

10,213

(6,463)

3,750

10,213

(5,440)

4,773

Tradename

2,838

(1,809)

1,029

2,838

(1,528)

1,310

Capitalized software

857

(763)

94

850

(710)

140

$
24,731

(18,668)

6,063

24,724

(16,128)

8,596

Skyhook’s patents are amortized straight-line over three and a half years and Skyhook’s tradename and customer relationship are amortized straight-line over five and a half years. Capitalized software intangible assets are amortized over three to five years. Amortization expense was $842 thousand and $850 thousand for the three months ended September 30, 2017 and 2016, respectively, and $2.5 million and $2.6 million for the nine months ended September 30, 2017 and 2016, respectively.

~~The estimated future amortization expense for the next five years related to intangible assets with definite lives as of September 30, 2017 is as follows (amounts in thousands):~~

Remainder of 2017

$
841

2018

$
2,575

2019

$
1,776

2020

$
871

2021

$
—

~~(6)~~ Debt

~~Outstanding debt at September 30, 2017 and December 31, 2016~~ is summarized as follows:

September 30, 2017

December 31, 2016

(amounts in thousands)
2014 Margin Loans
$
—

400,000
2016 Margin Loans

—

200,000
2017 Margin Loans

500,000

—
Deferred loan costs

(3,025)

(1,488)

$
496,975

598,512
Less debt classified as current

—

(400,000)
Total long-term debt
$
496,975

198,512


	Outstanding
	principal		Carrying value
	September 30,		September 30,	December 31,
	2020		2020	2019
	(amounts in thousands)
Margin Loan	$	700,000	700,000	575,000
Exchangeable Senior Debentures		575,000	621,000	—
Deferred financing costs		—	(2,336)	(2,056)
Total	$	1,275,000	1,318,664	572,944

~~I-15~~

~~Table of Contents~~

~~LIBERTY BROADBAND CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~2014 Margin Loans~~

On October 30, 2014, in connection with and prior to the effectiveness of the Broadband Spin-Off, a wholly-owned special purpose subsidiary of the Company (“BroadbandSPV”) entered into two margin loan agreements (the “2014 Margin Loan Agreements”) with each of the lenders party thereto. The 2014 Margin Loan Agreements permitted BroadbandSPV, subject to certain funding conditions, to borrow term loans up to an aggregate principal amount equal to $400 million (the “2014 Margin Loans”). The maximum borrowing capacity of $400 million under the 2014 Margin Loan Agreements was outstanding at December 31, 2016. The maturity date of the 2014 Margin Loans was October 30, 2017, accordingly the debt was classified as current as of December 31, 2016. Borrowings under the 2014 Margin Loan Agreements bore interest at the three-month LIBOR rate plus a per annum spread of 1.55%, and had an unused commitment fee of 0.25% per annum based on the average daily unused portion of the 2014 Margin Loans. Interest was payable quarterly in arrears beginning on December 31, 2014. On August 31, 2017, the outstanding borrowings of $400 million were repaid, as discussed below.

~~2016 Margin Loans~~

On March 21, 2016, a wholly-owned special purpose subsidiary of the Company (“Cheetah 5”), entered into two margin loan agreements (the “2016 Margin Loan Agreements” and together with the 2014 Margin Loan Agreements, the “Margin Loan Agreements”) with each of the lenders party thereto. The 2016 Margin Loan Agreements permitted Cheetah 5, subject to certain funding conditions, to borrow initial term loans up to an aggregate principal amount equal to $200 million and delayed draw loans (the “Draw Loans”) up to an aggregate principal amount equal to $100 million, for an aggregate total of $300 million (collectively the “2016 Margin Loans”). Cheetah 5 had borrowed $200 million as of December 31, 2016 and had $100 million available to be drawn until September 21, 2017. The maturity date of the 2016 Margin Loans was March 21, 2018, accordingly the debt was classified as noncurrent as of December 31, 2016. Borrowings under the 2016 Margin Loans bore interest at the applicable LIBOR rate plus 2.10% per annum and had an unused commitment fee of 0.5% per annum based on the average daily unused portion of the Draw Loans. Interest was payable quarterly in arrears beginning on March 31, 2016. The proceeds of the 2016 Margin Loans were used for the Company’s additional investment in Charter during May 2016, as discussed in note 4. On August 31, 2017, the outstanding borrowings of $200 million were repaid, as discussed below.

~~2017~~ Margin Loan Facility

On August ~~31, 2017,~~12, 2020, a bankruptcy remote wholly owned subsidiary of the Company (“SPV”), entered into aAmendment No. 3 to its multi-draw margin loan credit facility and Amendment No. 2 to its Collateral Account Control Agreement (the ~~“2017~~“Third Amendment”), which amends SPV’s margin loan agreement, dated as of August 31, 2017 (as amended by Amendment No. 1 to Margin Loan ~~Facility”~~Agreement, dated as of August 24, 2018, and ~~the credit agreement governing such facility, the “2017~~as further amended by Amendment No. 2 to Margin Loan Agreement and Amendment No. 1 to Collateral Account Control Agreement, dated August 19, 2019, the “Existing Margin Loan Agreement”; the Existing Margin Loan Agreement, as amended by the Third Amendment, the “Margin Loan Agreement”), with ~~Bank of America, N.A~~Wilmington Trust, National Association, as the administrative agent, BNP Paribas, as the calculation agent, and the lenders ~~thereunder.~~ party thereto. The Margin Loan Agreement provides for, among other things, a multi-draw term loan credit facility (the “Margin Loan Facility”) in an aggregate principal amount of up to $2.3 billion, including the Incremental Facility (as defined below). SPV’s obligations under the Margin Loan Facility are secured by first priority liens on the shares of Charter owned by SPV.

SPV is permitted, subject to certain funding conditions, to borrow term loans up to an aggregate principal amount equal to $1.0 billion. SPV will also have the ability ~~from time~~ to ~~time~~borrow up to ~~request~~$1.3 billion of additional loans ~~in an aggregate principal amount of up to $1.0 billion on an uncommitted basis~~under the Margin Loan Facility (the “Incremental Facility” and the loans made under the Incremental Facility, the “Additional Loans”). The borrowings under the Incremental Facility are subject to certain ~~conditions.~~conditions precedent, including the completion of the Combination (as defined in note 1 to the accompanying condensed consolidated financial statements). SPV ~~had borrowed $500~~drew down an additional $25 million on July 31, 2020 and an additional $100 million on August 20, 2020 on the Margin Loan Facility. Outstanding borrowings under the respective margin loan agreements were $700 million and $575 million as of September 30, ~~2017~~2020 and ~~had $500~~December 31, 2019, respectively. As of September 30, 2020, SPV was permitted to borrow an additional $300 million, ~~available to~~which may be drawn ~~until~~through August ~~31, 2018.~~12, 2021. The maturity date of the loans under the ~~2017~~ Margin Loan Agreement is August ~~30, 2019~~24, 2022 (except for any ~~incremental loans~~Additional Loans incurred thereunder to the extent SPV and the incremental lenders agree to a later maturity date). ~~Accordingly, the debt is classified as noncurrent as of September 30, 2017.~~ Borrowings under the ~~2017~~ Margin Loan Agreement bear interest at the three-month LIBOR rate plus a per annum spread of 1.5%, ~~unless it is unlawful for~~increasing to a per annum spread of 1.85% from and after the ~~applicable lender to fund or maintain loans based on LIBOR or there are material restrictions on~~completion of the ~~applicable lender to do so, in which case borrowings under the 2017~~Combination. The Margin Loan Agreement ~~will either (a) bear interest at 0.5% plus the higher of (i) the federal funds rate plus ½ of 1%, (ii) the prime rate and (iii)~~also provides for customary LIBOR ~~plus 1% for each day during such period or (b) be prepaid.~~replacement provisions. Borrowings outstanding under ~~these~~this margin ~~loans~~loan bore interest at a rate of ~~2.74%~~1.72% per annum at September 30, ~~2017. Interest~~2020 and is payable quarterly in arrears beginning on September 29, 2017. SPV used available cash and a portion of the proceeds of the loans under the 2017 Margin Loan Facility to repay the Margin Loan Agreements. Borrowings may also be used for distribution as a dividend or a return of capital, for the purchase of margin stock and for general corporate purposes. arrears.

The ~~2017~~ Margin Loan Agreement contains various affirmative and negative covenants that restrict the activities of the SPV (and, in some cases, the Company and its subsidiaries with respect to shares of Charter owned by the Company and its

~~I-16~~

~~Table of Contents~~

~~LIBERTY BROADBAND CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

subsidiaries). The ~~2017~~ Margin Loan Agreement does not include any financial covenants. The ~~2017~~ Margin Loan Agreement also contains restrictions related to additional indebtedness and events of default customary for margin loans of this type.

SPV’s obligations under the ~~2017~~ Margin Loan Agreement are secured by first priority liens on a portion of the Company’s ownership interest in Charter, sufficient for SPV to meet the loan to value requirements under the ~~2017~~ Margin Loan

I-14

Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Agreement. The ~~2017~~ Margin Loan Agreement indicates that no lender party shall have any voting rights with respect to the shares transferred, except to the extent that a lender party buys any shares in a sale or other disposition made pursuant to the terms of the loan agreements.As of September 30, ~~2017, approximately~~2020, 6.8 million shares of Charter with a value of ~~$2.5~~$4.2 billion were pledged as collateral pursuant to the ~~2017~~ Margin Loan Agreement.

Exchangeable Senior Debentures

~~(7)~~On August 27, 2020, the Company closed a private offering of $575 million aggregate original principal amount of its 2.75% Exchangeable Senior Debentures due 2050 (the “Debentures”), including Debentures with an aggregate original principal amount of $75 million issued pursuant to the exercise of an option granted to the initial purchasers. Upon an exchange of Debentures, the Company, at its election, may deliver shares of Charter Class A common stock, the value thereof in cash, or any combination of shares of Charter Class A common stock and cash. Initially, 1.1661 shares of Charter Class A common stock are attributable to each $1,000 original principal amount of Debentures, representing an initial exchange price of approximately $857.56 for each share of Charter Class A common stock. A total of 670,507 shares of Charter Class A common stock are attributable to the Debentures. Interest is payable quarterly on March 31, June 30, September 30 and December 31 of each year, commencing December 31, 2020. The Debentures may be redeemed by the Company, in whole or in part, on or after October 5, 2023. Holders of the Debentures also have the right to require the Company to purchase their Debentures on October 5, 2023. The redemption and purchase price will generally equal 100% of the adjusted principal amount of the Debentures plus accrued and unpaid interest to the redemption date, plus any final period distribution. The Company has elected to account for the Debentures using the fair value option. Accordingly, changes in the fair value of these instruments are recognized as unrealized gains (losses) in the accompanying condensed consolidated statements of operations. See note 3 for information related to unrealized gains (losses) on debt measured at fair value. As of September 30, 2020, a holder of the Debentures does not have the ability to exchange and, accordingly, the Debentures are classified as long-term debt in the condensed consolidated balance sheets.

(6) Stock-Based Compensation

Liberty Broadband grants, to certain of its directors, employees and employees of its subsidiaries, restricted stock, restricted stock units (“RSUs”) and stock options to purchase shares of its common stock (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an equity classified Award (such as stock options and restricted stock) based on the grant-date fair value (“GDFV”) of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). The Company measures the cost of employee services received in exchange for a liability classified Award based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date.

Included in the accompanying condensed consolidated statements of operations are the following amounts of stock-based compensation for the three and nine months ended September 30, ~~2017~~2020 and ~~2016~~2019 (amounts in thousands):


	Three months			Nine months
	ended			ended
	September 30,			September 30,
	2020		2019	2020	2019
Operating expense	$	10	12	23	60
Selling, general and administrative		1,992	2,519	5,713	7,610
	$	2,002	2,531	5,736	7,670

Three months

Nine months

ended

ended

September 30,

September 30,

2017

2016

2017

2016

Operating expense

$
3

4

5

2

Selling, general and administrative

1,429

1,596

4,032

4,363

Research and development

67

136

339

217

$
1,499

1,736

4,376

4,582

I-15

Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Liberty Broadband – Grants of ~~Stock Options~~Awards

During the nine months ended September 30, 2020, Liberty Broadband granted 100 thousand options to purchase shares of Series C Liberty Broadband common stock to our CEO. Such options had a GDFV of $27.39 per share and vest on December 31, 2020.

There were no0 options to purchase shares of Series A or Series B ~~or Series C~~ common stock granted during the nine months ended September 30, ~~2017.~~ 2020.

During the nine months ended September 30, 2020, Liberty Broadband granted 2 thousand time-based RSUs of Series C Liberty Broadband common stock to our CEO. The RSUs had a GDFV of $120.71 per share and cliff vest on December 10, 2020. This RSU grant was issued in lieu of our CEO receiving 50% of his remaining base salary for the last 3 quarters of calendar year 2020, and he has waived his right to receive the other 50%, in each case, in light of the ongoing financial impact of COVID-19.

The Company calculates the GDFV for all of its equity classified awards and any subsequent remeasurement of its liability classified awards using the Black-Scholes Model. The Company estimates the expected term of the Awards based on historical exercise and forfeiture data. ~~Since Liberty Broadband common stock has not traded on the stock market for a significant length of time, the~~The volatility used in the calculation for Awards is based on ~~a blend of~~ the historical volatility of Liberty Broadband ~~and Charter~~ common stock and the implied volatility of publicly traded Liberty Broadband and Charter options; as the most significant asset within Liberty Broadband, the volatility of Charter was considered in the overall volatility of Liberty Broadband.stock. The Company uses a ~~zero~~0 dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject ~~option.~~options.

~~I-17~~

~~Table of Contents~~

~~LIBERTY BROADBAND CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

Liberty Broadband – Outstanding Awards

The following tables present the number and weighted average exercise price (“WAEP”) of Awards to purchase Liberty Broadband common stock granted to certain officers, employees and directors of the Company, as well as the weighted average remaining life and aggregate intrinsic value of the Awards.


				Weighted
				average
				remaining	Aggregate
				contractual	intrinsic
	Series A	WAEP		life	value
	(in thousands)			(in years)	(in millions)
Outstanding at January 1, 2020	4	$	47.92
Granted	—	$	—
Exercised	(3)	$	51.84
Forfeited/cancelled	—	$	—
Outstanding at September 30, 2020	1	$	39.70	1.7	$	—
Exercisable at September 30, 2020	1	$	39.70	1.7	$	—

Weighted



average

remaining

Aggregate

contractual

intrinsic

Series A

WAEP

life

value

(in thousands)

(in years)

(in millions)
Outstanding at January 1, 2017

454

$
32.47

Granted

—

$
—

Exercised

(49)

$
26.85

Forfeited/cancelled

—

$
—

Outstanding at September 30, 2017

405

$
33.15

2.2

$
25
Exercisable at September 30, 2017

402

$
33.06

2.2

$
25

I-16

Table of Contents

Weighted



average

remaining

Aggregate

contractual

intrinsic

Series C

WAEP

life

value

(in thousands)

(in years)

(in millions)
Outstanding at January 1, 2017

2,467

$
42.45

Granted

—

$
—

Exercised

(94)

$
27.08

Forfeited/cancelled

—

$
—

Outstanding at September 30, 2017

2,373

$
43.06

5.4

$
124
Exercisable at September 30, 2017

851

$
33.59

2.3

$
52

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)


				Weighted
				average
				remaining	Aggregate
				contractual	intrinsic
	Series C	WAEP		life	value
	(in thousands)			(in years)	(in millions)
Outstanding at January 1, 2020	1,932	$	61.43
Granted	122	$	116.09
Exercised	(6)	$	51.82
Forfeited/cancelled	—	$	—
Outstanding at September 30, 2020	2,048	$	64.73	4.7	$	160
Exercisable at September 30, 2020	1,616	$	50.00	4.2	$	150

As of September 30, ~~2017~~,2020, the total unrecognized compensation cost related to unvested Awards was approximately ~~$11 million~~.$9.0 million. Such amount will be recognized in the Company's condensed consolidated statements of operations over a weighted average period of approximately 22.7 years.

As of September 30, ~~2017,~~2020, Liberty Broadband reserved ~~2.8~~2.0 million shares of Series A and Series C common stock for issuance under exercise privileges of outstanding stock Awards.

Skyhook Equity Incentive Plans

Long-Term Incentive Plans

Skyhook ~~issued 3.3 million~~has a long-term incentive plan which provides for the granting of phantom stock appreciation rights ~~(“PARs”)~~ and no phantom stock units ~~(“PSUs”) during the nine months ended September 30, 2017.~~to employees, directors, and consultants of Skyhook that is not significant to Liberty Broadband. As of September 30, ~~2017, the fair value of outstanding PARs~~2020 and ~~PSUs was approximately $2.4 million. As of September 30, 2017, $1.6~~December 31, 2019, $1.0 million ~~(Level 3) is~~and $1.2 million, respectively, are included in ~~Other current~~other liabilities ~~in the accompanying condensed consolidated balance sheet~~ for the fair value (Level 2) of ~~Skyhook’s vested~~the Company’s long-term incentive plan obligations.

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~~LIBERTY BROADBAND CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~(8)~~(7) Commitments and Contingencies

~~Leases~~

Skyhook leases various properties under operating leases expiring at various times through 2018. Skyhook’s two principal facilities are under lease through December 2017 and December 2019, respectively. Including amounts due to Liberty under the facilities sharing agreement, the Company’s total rental expense was $368 thousand and $452 thousand for each of the three months ended September 30, 2017 and 2016, respectively, and $890 thousand and $1.0 million for each of the nine months ended September 30, 2017 and 2016, respectively.

General Litigation

In the ordinary course of business, the Company and its consolidated subsidiary are parties to legal proceedings and claims involving alleged infringement of third-party intellectual property rights, defamation, and other ~~claims, including infringement of the intellectual property rights of the Company and its consolidated subsidiary by third parties.~~claims. Although it is reasonably possible that the Company may incur losses upon conclusion of such matters, an estimate of any loss or range of loss cannot be made. In the opinion of management, it is expected that amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying condensed consolidated financial statements.

~~Indemnification Claims~~

In the normal course of business, Skyhook provides indemnification to certain customers against specified claims that might arise against those customers from the use of Skyhook’s products. To date, Skyhook has not made any significant reimbursements to any of its customers for any losses related to these indemnification provisions. However, four such claims are currently pending. Skyhook is unable to estimate the maximum potential impact of these indemnification provisions on its future results of operations, although Skyhook’s liabilities in certain of those arrangements are customarily limited in various respects, including monetarily. Accordingly, no accrual was recorded related to indemnification claims as of September 30, 2017 or December 31, 2016.

Certain Risks and Concentrations

The Skyhook business is subject to certain risks and concentrations including dependence on relationships with its customers. The Company’s largest customers, that accounted for greater than 10% of revenue individually, aggregated ~~57%~~59% and ~~85%~~59% of total revenue for the three months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively, and ~~57%~~59% and ~~64%~~71% of total revenue for the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively.

Off-Balance Sheet Arrangements

Liberty Broadband did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, results of operations, liquidity, capital expenditures or capital resources.

~~(9)~~I-17

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LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

(8) Segment Information

Liberty Broadband identifies its reportable segments as (A) those consolidated companies that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA or total assets and (B) those equity method affiliates whose share of earnings or losses represent 10% or more of Liberty Broadband’s annual pre-tax ~~earnings.~~earnings (losses).

Liberty Broadband evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue and Adjusted OIBDA. In addition, Liberty Broadband reviews nonfinancial measures such as subscriber growth.

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~~LIBERTY BROADBAND CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

For segment reporting purposes, Liberty Broadband defines Adjusted OIBDA as revenue less operating expenses and selling, general and administrative expenses (excluding stock-based compensation). Liberty Broadband believes this measure is an important indicator of the operational strength and performance of its businesses ~~including~~by identifying those items that are not directly a reflection of each ~~business’s ability to service debt and fund capital expenditures.~~business’ performance or indicative of ongoing business trends. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, stock-based compensation, separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net earnings, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. Liberty Broadband generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.

For the nine months ended September 30, ~~2017,~~2020, Liberty Broadband has identified the following consolidated ~~subsidiary~~company and equity method investment as its reportable segments:

●

Skyhook—a wholly owned subsidiary of the Company that provides ~~a Wi-Fi based~~the Precision Location Solution (a location ~~platform focused on providing positioning technology~~determination service) and ~~contextual~~Geospatial Insights product (a location intelligence ~~solutions.~~

and data insights service).

●

Charter—an equity method investment ~~of the Company~~ that is one of the largest providers of cable services in the United States, offering a variety of entertainment, information and communications solutions to residential and commercial customers.

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~~LIBERTY BROADBAND CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(unaudited)~~

Liberty Broadband’s operating segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies. The accounting policies of the segments that are also consolidated companies are the same as those described in the Company’s summary of significant accounting policies in the Company’s annual financial ~~statements.~~statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. We have included amounts attributable to Charter in the tables below. Although Liberty Broadband owns less than 100% of the outstanding shares of Charter, 100% of the Charter amounts are included in the ~~schedule~~tables below and subsequently eliminated in order to reconcile the account totals to the Liberty Broadband condensed consolidated financial statements.

~~Performance Measures~~

Three months ended  September 30,

2017

2016

Adjusted

Adjusted

Revenue

OIBDA

Revenue

OIBDA

(amounts in thousands)

Skyhook

$
3,430

(980)

20,616

11,422

Charter

10,458,000

3,674,000

10,037,000

3,429,000

Corporate and other

—

(2,366)

—

(2,091)

10,461,430

3,670,654

10,057,616

3,438,331

Eliminate equity method affiliate

(10,458,000)

(3,674,000)

(10,037,000)

(3,429,000)

Consolidated Liberty Broadband

$
3,430

(3,346)

20,616

9,331

Nine months ended September 30,

2017

2016

Adjusted

Adjusted

Revenue

OIBDA

Revenue

OIBDA

(amounts in thousands)

Skyhook

$
9,643

(6,839)

27,413

1,234

Charter

30,979,000

10,946,000

18,728,000

5,963,000

Corporate and other

—

(5,423)

—

(7,170)

30,988,643

10,933,738

18,755,413

5,957,064

Eliminate equity method affiliate

(30,979,000)

(10,946,000)

(18,728,000)

(5,963,000)

Consolidated Liberty Broadband

$
9,643

(12,262)

27,413

(5,936)

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LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Performance Measures


	Three months ended September 30,
	2020			2019
			Adjusted		Adjusted
	Revenue		OIBDA	Revenue	OIBDA

		(amounts in thousands)
Skyhook	$	4,219	(662)	3,713	(1,105)
Charter		12,039,000	4,625,000	11,450,000	4,072,000
Corporate and other		—	(13,608)	—	(3,481)
		12,043,219	4,610,730	11,453,713	4,067,414
Eliminate equity method affiliate		(12,039,000)	(4,625,000)	(11,450,000)	(4,072,000)
Consolidated Liberty Broadband	$	4,219	(14,270)	3,713	(4,586)


	Nine months ended September 30,
	2020			2019
			Adjusted		Adjusted
	Revenue		OIBDA	Revenue	OIBDA

	(amounts in thousands)
Skyhook	$	12,437	(2,429)	10,918	(3,174)
Charter		35,473,000	13,501,000	34,003,000	12,255,000
Corporate and other		—	(24,229)	—	(8,703)
		35,485,437	13,474,342	34,013,918	12,243,123
Eliminate equity method affiliate		(35,473,000)	(13,501,000)	(34,003,000)	(12,255,000)
Consolidated Liberty Broadband	$	12,437	(26,658)	10,918	(11,877)

Other Information


	September 30, 2020
	Total		Investments	Capital
	assets		in affiliates	expenditures

	(amounts in thousands)
Skyhook	$	16,071	—	42
Charter		144,193,000	—	5,352,000
Corporate and other		12,845,618	12,450,425	—
		157,054,689	12,450,425	5,352,042
Eliminate equity method affiliate		(144,193,000)	—	(5,352,000)
Consolidated Liberty Broadband	$	12,861,689	12,450,425	42

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LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

~~Other Information~~(unaudited)

September 30, 2017

Total

Investments

Capital

assets

in affiliates

expenditures

(amounts in thousands)

Skyhook

$
26,136

—

27

Charter

148,228,000

—

6,096,000

Corporate and other

9,455,758

9,326,871

—

157,709,894

9,326,871

6,096,027

Eliminate equity method affiliate

(148,228,000)

—

(6,096,000)

Consolidated Liberty Broadband

$
9,481,894

9,326,871

27

The following table provides a reconciliation of ~~consolidated segment~~ Adjusted OIBDA to Operating income (loss) and Earnings (loss) before income taxes:


						Three months ended			Nine months
						September 30,			ended September 30,
						2020		2019	2020	2019

	Three months			Nine months
	ended September 30,			ended September 30,
	2017		2016	2017	2016
		(amounts in thousands)
Consolidated segment Adjusted OIBDA	$	(3,346)	9,331	(12,262)	(5,936)
							(amounts in thousands)
Adjusted OIBDA						$	(14,270)	(4,586)	(26,658)	(11,877)
Stock-based compensation		(1,499)	(1,736)	(4,376)	(4,582)		(2,002)	(2,531)	(5,736)	(7,670)
Depreciation and amortization		(942)	(971)	(2,844)	(2,935)		(56)	(471)	(1,041)	(1,408)
Operating income (loss)		(5,787)	6,624	(19,482)	(13,453)		(16,328)	(7,588)	(33,435)	(20,955)
Interest expense		(5,518)	(4,090)	(14,899)	(10,547)		(3,719)	(6,123)	(14,711)	(19,008)
Dividend and interest income		422	190	1,219	4,697
Share of earnings (loss) of affiliates		(5,280)	19,046	25,109	570,178
Share of earnings (loss) of affiliates, net							188,586	61,633	408,396	141,882
Gain (loss) on dilution of investment in affiliate							(35,284)	(11,219)	(140,610)	(68,944)
Realized and unrealized gains (losses) on financial instruments, net		2,675	—	5,026	92,990		(39,324)	(433)	(39,324)	(433)
Gain (loss) on dilution of investment in affiliate		(3,718)	(16,331)	(42,515)	760,074
Other, net		9	5	11	112		8	350	199	1,179
Earnings (loss) before income taxes	$	(17,197)	5,444	(45,531)	1,404,051	$	93,939	36,620	180,515	33,721

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding ~~our business, product and marketing strategies;~~ new service and product offerings; future expenses; the ~~return on our investment in, and~~ performance of our equity affiliate, Charter Communications, Inc. (“Charter”), and its expectations related to COVID-19 (as defined below); ~~Charter’s ongoing integration of its acquired operations;~~ the ~~recoverability of our goodwill and other long-lived assets;~~Combination (as defined below); our projected sources and uses of cash; indebtedness; and the anticipated non-material impact of certain contingent liabilities related to legal ~~and tax~~ proceedings and other matters arising in the ordinary course of business. Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but such statements necessarily involve risks and uncertainties and there can be no assurance that the expectation or belief will result or be achieved or accomplished. The following include some but not all of the factors (as they relate to our consolidated subsidiary and equity affiliate) that could cause actual results or events to differ materially from those anticipated:

●

The impact of the novel coronavirus (“COVID-19”) pandemic and local, state and federal governmental responses to the pandemic on the economy, our customers, our vendors, and our businesses generally;

●

the satisfaction of conditions to the Combination;

●

Charter’s ability ~~to promptly, efficiently and effectively integrate acquired operations;~~

~~the ability of Charter~~ to sustain and grow revenue and cash flow from operations by offering Internet, video, ~~Internet,~~ voice, mobile, advertising and other services to residential and commercial customers, to adequately meet the customer experience demands in its ~~markets~~service areas and to maintain and grow its customer base, particularly in the face of increasingly aggressive competition, the need for innovation and the related capital expenditures;

●

the impact of competition from other market participants, including but not limited to incumbent telephone companies, direct broadcast satellite operators, wireless broadband and telephone providers, digital subscriber line providers, fiber to the home providers, ~~video provided over the Internet~~ by (i) market participants that have not historically competed in the multichannel video business, (ii) traditional multichannel video distributors, and (iii) content providers that have historically licensed cable networks to multichannel video distributors,and providers of ~~advertising~~video content over ~~the Internet;~~

broadband Internet connections;

●

~~general business conditions, economic uncertainty or downturn, high unemployment levels and the level of activity in the housing sector;~~

Charter’s ability to obtain programming at reasonable prices or to raise prices to offset, in whole or in part, the effects of higher programming costs (including retransmission consents);

●

~~the development~~Charter’s ability to develop and ~~deployment of~~deploy new products and technologies, including ~~wireless~~mobile products ~~Charter’s cloud-based user interface, Spectrum Guide~~®~~, and downloadable security for set top boxes~~ and any other ~~cloud-based~~ consumer services and service platforms;

●

any events that disrupt Charter’s or Skyhook’s networks, information systems or properties and impair their operating activities or negatively impact their respective reputation;

●

the effects of governmental regulation on the business of Charter and Skyhook, including costs, disruptions and possible limitations on Charter’s operating flexibility related to, and its ability to comply with, regulatory conditions applicable to Charter as a result of previous mergers;

●

general business conditions, economic uncertainty or downturn, including the impacts of the COVID-19 pandemic to unemployment levels and the level of activity in the housing sector;

●

failure to protect the security of personal information about the customers of our operating subsidiary and equity affiliate, subjecting us to costly government enforcement actions or private litigation and reputational damage;

●

changes in, or failure or inability to comply with, government regulations, including, without limitation, regulations of the Federal Communications Commission, and adverse outcomes from regulatory proceedings;

●

the ~~effects of governmental regulation on our business or potential business combination transactions~~ ~~including costs, disruptions and possible limitations on Charter’s operating flexibility related to, and its~~ ability to ~~comply with, regulatory conditions applicable to Charter as a result of the Time Warner Cable Merger~~retain and ~~the Bright House Transaction (each as defined below and collectively, the “Transactions”);~~

hire key personnel;

●

~~any events that disrupt Charter’s networks, information systems or properties and impair its operating activities and negatively impact its reputation;~~

the ability of suppliers and vendors to deliver products, equipment, software and services;

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●

the outcome of any pending or threatened litigation;

~~I-23~~

~~Table of Contents~~

●

changes in the nature of key strategic relationships with partners, vendors and joint ~~venturers;~~

ventures;

●

the availability and access, in general, of funds to meet debt obligations prior to or when they become due and to fund operations and necessary capital expenditures, either through (i) cash on hand, (ii) free cash flow, or (iii) access to the capital or credit markets;

●

the ability of Charter and our company to comply with all covenants in their and our respective debt instruments, any violation of which, if not cured in a timely manner, could trigger a default of other obligations under cross-default provisions;

and

●

our ability to successfully monetize certain of our ~~assets; and~~

assets.

~~the ability to retain and hire key personnel.~~

For additional risk factors, please see Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019 and Part II, Item 1A in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and this Quarterly Report on Form 10-Q. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Quarterly Report, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based.

The following discussion and analysis provides information concerning our results of operations and financial condition. This discussion should be read in conjunction with our accompanying condensed consolidated financial statements and the notes ~~thereto. Additionally, see note 1 to~~thereto and our Annual Report on Form 10-K for the accompanying condensed consolidated financial statements for an overview of new accounting standards that we have adopted or that we plan to adopt that have had or may have an impact on our financial statements.year ended December 31, 2019.

Overview

Through a number of ~~(i) Liberty’s former~~prior years’ transactions, Liberty Broadband has acquired an interest in Charter Communications, Inc. (“Legacy Charter”), (ii) Liberty’s former wholly-owned subsidiary TruePosition, Inc., (iii) Liberty’s former minority equity investment in Time Warner Cable, Inc. (“Time Warner Cable”, “TWC”, or “Legacy TWC”), (iv) certain deferred tax liabilities, as well as liabilities related to the Time Warner Cable written call options and (v) initial indebtedness, pursuant to margin loans entered into prior to the completion of the Broadband Spin-Off. The Broadband Spin-Off was accounted for at historical cost due to the pro rata nature of the distribution to holders of Liberty common stock.

On May 18, 2016, Time Warner Cable merged with Legacy Charter (the “Time Warner Cable Merger”). In connection with the Time Warner Cable Merger, Legacy Charter underwent a corporate reorganization, resulting in CCH I, LLC, a former subsidiary of Legacy Charter (“Charter”), becoming the new publicly traded parent company. Also on May 18, 2016, the previously announced acquisition of Bright House Networks, LLC (“Bright House”) from Advance/Newhouse Partnership (“A/N”) by Charter (the “Bright House Transaction”) was completed. In connection with the Time Warner Cable Merger and Bright House Transaction, Liberty Broadband entered into certain agreements with Legacy Charter, Charter, Liberty Interactive Corporation (“Liberty Interactive”) and Time Warner Cable. In connection with the Time Warner Cable Merger and Bright House Transaction, Liberty Broadband exchanged its shares of Time Warner Cable for shares of Charter and purchased additional shares of Charter. ~~As a result, and pursuant~~Pursuant to proxy agreements ~~entered into~~ with GCI Liberty, ~~Interactive~~Inc. (“GCI Liberty”) and ~~A/N,~~Advance/Newhouse Partnership, Liberty Broadband controls 25.01% of the aggregate voting power of Charter. In addition, in connection with the Time Warner Cable Merger, Liberty Broadband funded its purchase of shares of Charter Class A common stock using proceeds of $4.4 billion related to subscriptions for approximately 78.3 million newly issued shares of Liberty Broadband Series C common stock.

~~I-24~~

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location services. In 2015, one of Skyhook Holding, Inc.’s customers, a wireless carrier utilizing the legacy U-TDOA service which accounted for approximately 80% - 90% of consolidated revenue at the time, gave notice that it planned to discontinue use of the U-TDOA service and did not intend to renew its contract, which expired on December 31, 2015. The loss of this customer had a material adverse effect on Skyhook Holding, Inc.’s business. As a result of the loss of this wireless carrier customer, further changes in the regulatory environment and a shift in the overall market for the legacy U-TDOA service, Skyhook Holding, Inc. ceased making further investment in its U-TDOA products. In 2016, Skyhook Holding, Inc. and Skyhook Wireless, Inc. combined operations in order to focusfocuses on the development and sale of Skyhook’s device-based location technology. Skyhook markets and sells two primary products: (1) a location determination service called the ~~suite of~~Precision Location Solution; and (2) a location intelligence and ~~context products, and are referred to collectively herein as “Skyhook.”~~data insights service called Geospatial Insights.

The financial information represents a consolidation of the historical financial information of Skyhook, Liberty Broadband’s interest in Charter ~~Liberty Broadband’s former minority equity investment in Time Warner Cable~~ and certain deferred tax liabilities. This financial information refers to ~~the consolidation of the aforementioned subsidiary, investments, and financial instruments,~~Liberty Broadband Corporation as “Liberty Broadband,” “the Company,” “us,” “we” and “our” here and in the notes to the accompanying condensed consolidated financial statements.

On August 6, 2020, Liberty Broadband and GCI Liberty entered into a definitive merger agreement under which Liberty Broadband agreed to acquire all of the outstanding shares of GCI Liberty in a stock-for-stock merger (the “Combination”). Under the terms of the merger agreement each holder of Series A and B common stock of GCI Liberty will receive 0.58 of a share of Series C common stock and Series B common stock, respectively, of Liberty Broadband. Additionally, holders of a share of Series A Cumulative Redeemable Preferred Stock of GCI Liberty will receive one share of Series A Cumulative Redeemable Preferred Stock with mirror terms to be issued by Liberty Broadband. The Combination was recommended to the Company’s Board of Directors for approval by a special committee composed solely of independent, disinterested directors and advised by independent financial and legal advisors. The closing of the Combination is subject to certain customary conditions, including: (i) the adoption of the merger agreement by holders of a majority of the aggregate

~~I-25~~I-22

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voting power of the GCI Liberty outstanding stock entitled to vote thereon not owned by John C. Malone and certain other persons, (ii) the adoption of the merger agreement by holders of a majority of the aggregate voting power of the Liberty Broadband outstanding stock entitled to vote thereon not owned by John C. Malone and certain other persons, (iii) the adoption of the merger agreement by holders of a majority of the aggregate voting power of the GCI Liberty outstanding stock entitled to vote thereon, (iv) approval of the Liberty Broadband stock issuance by holders of a majority of the aggregate voting power of the Liberty Broadband outstanding stock present in person or by proxy at the stockholder meeting and entitled to vote thereon and (v) the receipt of any applicable regulatory approvals. Liberty Broadband and GCI Liberty expect the Combination to close no later than the first quarter of 2021, subject to potential COVID-19 related delays.

In December 2019, Chinese officials reported a novel coronavirus outbreak. COVID-19 has since spread through China and internationally. On March 11, 2020, the World Health Organization assessed COVID-19 as a global pandemic, causing many countries throughout the world to take aggressive actions, including imposing travel restrictions and stay-at-home orders, closing public attractions and restaurants, and mandating social distancing practices. During this time, Skyhook has maintained function of all departments and service has been uninterrupted. Skyhook’s business results for the three and nine months ended September 30, 2020 were largely unaffected by the pandemic; however, Skyhook cannot predict the ultimate impact of COVID-19 on its business, including its customer renewals, ability to generate new business and its ability to collect on payments from customers.

As the COVID-19 pandemic continues to significantly impact the United States, Charter has continued to deliver services uninterrupted by the pandemic. Because Charter has invested significantly in its network and through normal course capacity increases, Charter has been able to respond to the significant increase in network activity from the private and public response to COVID-19 as Charter does its part as a major provider of Internet services in the United States by, among other things, enabling social distancing through telecommuting and e-learning across its footprint of 41 states. Charter has invested significantly in its self-service infrastructure, and customers have accelerated the adoption of its self-installation and digital self-service capabilities. Increased demand for Charter’s connectivity and the positive response to Charter’s Remote Education Offer pursuant to which new customers with students or educators in the household were eligible to receive Internet service for free for 60 days and the Keep Americans Connected (“KAC”) Pledge, which paused collection efforts and related disconnects for residential and small and medium business (“SMB”) customers with COVID-19 related payment challenges through June 30, 2020, have positively impacted Charter’s results for the nine months ended September 30, 2020 with retention rates for these customers similar to Charter’s average customer base.

During the three and nine months ended September 30, 2020, Charter’s results were negatively impacted by COVID-19, including recording $218 million of estimated customer credits to be provided to video customers offset by $173 million in-period recognition of estimated rebates from sports programming networks as a result of canceled sporting events and related costs. The difference between the $218 million estimated credit to customers which lowered video revenue and the $163 million reduction in programming expense and $10 million reduction in regulatory, connectivity and produced content costs relates to an expected reduction in sports rights content costs which is being amortized over the life of the contract, consistent with the deferral of expense in the three months ended June 30, 2020 when games were canceled. Charter intends to provide a credit on customers’ invoices for all of the rebates provided by the sports programming networks when details are finalized with these networks.

Charter has also seen declines in advertising revenue as a result of COVID-19 and lower revenue from seasonal plans offered to SMB and Enterprise hospitality customers that have requested a reduced level of service due to temporary business closure or because these customers have reduced their service offering to their own customers. In addition, in an effort to assist COVID-19 impacted customers with overdue balances at the end of the KAC program, Charter waived approximately $85 million of receivables which was recorded as a reduction of revenue in the second quarter of 2020.

Charter cannot predict the ultimate impact of COVID-19 on its business, including the depth and duration of the economic impact to household formation and growth and its residential and business customers’ ability to pay for its products and services including the impact of extended unemployment benefits and other stimulus packages. Charter expects that some of the COVID-19 programs discussed above may result in incremental churn and bad debt during the remainder of the year and into 2021. In addition, there is uncertainty regarding the impact of government emergency declarations, the ability of suppliers and vendors to provide products and services to Charter, the pace of new housing construction, changes in business spend in its local and national ad sales business, the effects to employees’ health and safety and resulting reorientation

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of its work activities, and the risk of limitations on the deployment and maintenance of services (including by limiting customer support and on-site service repairs and installations).

Results of Operations—Consolidated—September 30, ~~2017~~2020 and ~~2016~~2019

Consolidated operating results:


						Three months ended			Nine months ended
						September 30,			September 30,
						2020		2019	2020	2019

	Three months ended			Nine months ended
	September 30,			September 30,
	2017		2016	2017	2016
	(amounts in thousands)
						(amounts in thousands)
Revenue	$	3,430	20,616	9,643	27,413	$	4,219	3,713	12,437	10,918
Operating expense		643	778	1,963	2,097		2,513	2,311	7,492	6,743
Research and development		1,373	2,248	5,875	7,823
Selling, general and administrative		4,760	8,259	14,067	23,429		15,976	5,988	31,603	16,052
Stock-based compensation		1,499	1,736	4,376	4,582		2,002	2,531	5,736	7,670
Depreciation and amortization		942	971	2,844	2,935		56	471	1,041	1,408
Operating income (loss)		(5,787)	6,624	(19,482)	(13,453)		(16,328)	(7,588)	(33,435)	(20,955)
Less impact of stock-based compensation and depreciation and amortization		2,441	2,707	7,220	7,517		2,058	3,002	6,777	9,078
Adjusted OIBDA	$	(3,346)	9,331	(12,262)	(5,936)	$	(14,270)	(4,586)	(26,658)	(11,877)

Revenue

Revenue ~~decreased $17.2~~increased $0.5 million and ~~$17.8~~$1.5 million for the three and nine months ended September 30, ~~2017,~~2020, respectively, as compared to the ~~same~~corresponding periods in the prior year. The ~~decrease~~increase in revenue for both the three and nine months ended September 30, 2017, as compared to the same periods in the prior year, was due to a new license agreement entered into during 2016 with no similar event occurring in 2017. On September 1, 2016, Skyhook entered into a license agreement pursuant to which Skyhook agreed to grant to the licensee a perpetual, non-exclusive, non-transferable, worldwide license to patents and patent applications owned by the companies. In exchange for this grant, the licensee agreed to pay a one-time lump sum payment of $17.5 million that was recognized as revenue during the three months ended September 30, 2016.

~~Operating expense, research and development, and selling, general and administrative expenses~~

~~Operating expense decreased by $135 thousand and $134 thousand~~ for the three and nine months ended September 30, ~~2017, respectively,~~2020, as compared to the ~~same~~corresponding periods in the prior ~~year. Research~~year, was primarily due to increased revenue from existing customers.

Operating expense and ~~development~~selling, general and administrative expenses

Operating expense ~~decreased~~increased by ~~$875 thousand~~$0.2 million and ~~$1.9~~$0.7 million for the three and nine months ended September 30, ~~2017,~~2020, respectively, as compared to the ~~same~~corresponding periods in the prior year, primarily ~~as a result of headcount reductions~~due to increased personnel and ~~other cost containment measures taken by Skyhook related to the run-off of the U-TDOA business.~~cloud computing costs. Selling, general, and administrative expense ~~decreased~~increased by ~~$3.5~~$10.0 million and ~~$9.4~~$15.6 million for the three and nine months ended September 30, ~~2017,~~2020, respectively, as compared to the same periods in the prior year, primarily as a result of headcount reductions and other cost containment measures taken by Skyhook related to the run-off of the U-TDOA business coupled with reduced legal expenses of $1.3 million and $3.5 million, respectively, compared to the samecorresponding periods in the prior year. ~~Legal expenses~~The increases in ~~the current year have not been as significant due to a decrease in activity associated with license sales in the current period.~~

~~Stock-based compensation~~

~~The decrease in stock-based compensation~~selling, general and administrative expense ~~of $237 thousand and $206 thousand for~~during the three and nine months ended September 30, ~~2017, respectively, as~~2020, compared to the corresponding periods in the prior year, were primarily due to ~~adjustments made~~increased professional service fees at the corporate level of $9.8 million and $15.2 million, respectively, due to the Combination and certain ~~outstanding awards~~fees related to debt activity.

Stock-based compensation

The decrease in ~~2016 which increased their value, partially offset by additional grants~~stock-based compensation expense of ~~awards,~~$0.5 million and ~~the ongoing vesting of outstanding grants.~~

~~Depreciation and amortization~~

~~Depreciation and amortization expense decreased by $29 thousand and $91 thousand during~~$1.9 million for the three and nine months ended September 30, ~~2017,~~2020, respectively, as compared to the corresponding periods in the prior year, was primarily due to a decrease in the value of restricted stock units of Liberty Broadband Series C common stock granted during the first half of 2020.

Depreciation and amortization

Depreciation and amortization expense decreased by $0.4 million for both the three and nine months ended September 30, 2020, as compared to the corresponding periods in the prior year, primarily due to certain intangible assets becoming fully amortized.

Operating income (loss)

Operating loss increased $8.7 million and $12.5 million for the three and nine months ended September 30, 2020, respectively, as compared to the corresponding periods in the prior year due to ~~certain assets becoming fully depreciated.~~

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~~Operating income (loss)~~

~~Operating loss increased $12.4 million and $6.0 million for the three and nine months ended September 30, 2017, respectively, as compared to the same periods in the prior year due to~~ the items discussed above.

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Adjusted OIBDA

To provide investors with additional information regarding our financial results, we also disclose Adjusted OIBDA, which is a non-GAAP financial measure. We define Adjusted OIBDA as ~~revenue less~~ operating ~~expenses~~income (loss) plus depreciation and ~~selling, general~~amortization, stock-based compensation, separately reported litigation settlements, restructuring, acquisition and ~~administrative expenses (excluding stock-based compensation).~~other related costs and impairment charges. Our chief operating decision maker and management team use this measure of performance in conjunction with other measures to evaluate our businesses and make decisions about allocating resources among our businesses. We believe this is an important indicator of the operational strength and performance of our businesses ~~including~~by identifying those items that are not directly a reflection of each ~~business’s ability to service debt and fund capital expenditures.~~business’ performance or indicative of ongoing business trends. In addition, this measure allows us to view operating results, perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes such costs as depreciation and amortization, stock-based compensation, separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to generally accepted accounting principles in the United States (“GAAP”). Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with ~~GAAP. See note 9 to the accompanying condensed consolidated financial statements for a reconciliation of Adjusted OIBDA to Operating income (loss) and Earnings (loss) before income taxes.~~U.S. generally accepted accounting principles.

Adjusted OIBDA decreased ~~$12.7~~$9.7 million and ~~$6.3~~$14.8 million during the three and nine months ended September 30, ~~2017,~~2020, respectively, as compared to the ~~same~~corresponding periods in the prior year. Adjusted OIBDA for the three months ended September 30, 2017 and 2016, includes $2.4 million and $2.1 million of corporate selling, general and administrative costs, respectively. Adjusted OIBDA for the nine months ended September 30, 2017 and 2016, includes $5.4 million and $7.2 million of corporate selling, general and administrative costs, respectively. The ~~decrease~~decreases in corporate selling, general and administrative costs for the nine months ended September 30, 2017, as compared to same periods in the prior year, was primarily due to decreased legal expenses. Legal expenses decreased in the current year due to legal expenses associated with the Transactions in 2016. The decrease in Skyhook Adjusted OIBDA for the three and nine months ended September 30, ~~2017,~~2020, as compared to the corresponding periods in the prior year, ~~was~~were due primarily to the ~~new license agreement entered into during the three months ended September 30, 2016,~~increases in operating and selling, general and administrative expenses, partially offset by ~~lower operating expenses~~the increases in revenue, as discussed above.

Other Income and Expense

Components of Other income (expense) are presented in the table below.


						Three months ended			Nine months ended
						September 30,			September 30,
						2020		2019	2020	2019

	Three months ended			Nine months ended
	September 30,			September 30,
	2017		2016	2017	2016
	(amounts in thousands)
						(amounts in thousands)
Other income (expense):
Interest expense	$	(5,518)	(4,090)	(14,899)	(10,547)	$	(3,719)	(6,123)	(14,711)	(19,008)
Dividend and interest income		422	190	1,219	4,697
Share of earnings (losses) of affiliates		(5,280)	19,046	25,109	570,178		188,586	61,633	408,396	141,882
Gain (loss) on dilution of investment in affiliate							(35,284)	(11,219)	(140,610)	(68,944)
Realized and unrealized gains (losses) on financial instruments, net		2,675	—	5,026	92,990		(39,324)	(433)	(39,324)	(433)
Gain (loss) on dilution of investment in affiliate		(3,718)	(16,331)	(42,515)	760,074
Other, net		9	5	11	112		8	350	199	1,179
	$	(11,410)	(1,180)	(26,049)	1,417,504
						$	110,267	44,208	213,950	54,676

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Interest expense

Interest expense ~~increased $1.4~~decreased $2.4 million and ~~$4.4~~$4.3 million during the three and nine months ended September 30, ~~2017,~~2020, respectively, as compared to the corresponding periods in the prior year. The ~~increase was primarily due to an increase~~decreases were driven by a decrease in ~~LIBOR~~our weighted average interest rate during the current periods as compared to the corresponding periods in the prior ~~year.~~year, partially offset by additional amounts outstanding on the Margin Loan Facility and Debentures (as defined in note 5 to the accompanying condensed consolidated financial statements) that were borrowed in August 2020.

~~Dividend~~Share of earnings (losses) of affiliates

Share of earnings of affiliates increased $127.0 million and ~~interest income~~

~~Dividend and interest income increased $232 thousand and decreased $3.5~~$266.5 million during the three and nine months ended September 30, 2017, respectively, as compared to the corresponding periods in the prior year. The increase in dividend and interest income for the three months ended September 30, 2017, as compared to the same period in the prior year, was the result of increased interest income due to higher short-term marketable securities rates during the third quarter of 2017, partially offset by lower cash balances. The decrease in dividend and interest income for the nine months ended September 30, 2017, as compared to the same period in the prior year, was the result of a loss of dividend income due to the Time Warner Cable Merger during May 2016.

~~Share of earnings (losses) of affiliates~~

~~Share of earnings of affiliates decreased $24.3 million and $545.1 million during the three and nine months ended September 30, 2017,~~2020, respectively, as compared to the corresponding periods in the prior year. The Company’s Share of earnings (losses) of affiliates line item in the accompanying condensed consolidated statements of operations includes expenses of ~~$15.3~~$25.5 million and ~~$18.5~~$32.7 million, net of related taxes, for the three months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively, and ~~expenses of $44.0~~$107.3 million and ~~$23.2~~$88.7 million, net of related taxes, for the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively, due to the increase in amortization ~~related to~~of the excess basis of assets with identifiable useful lives and ~~debt.~~debt, which was primarily due to Charter’s share buyback program. The ~~decrease~~change in the share of earnings of affiliates in the three

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and nine months ended September 30, ~~2017,~~2020, as compared to the ~~same~~corresponding periods in the prior year, was ~~primarily~~ the result of the ~~Time Warner Cable Merger and related transactions during May 2016 (see note 4 to the accompanying condensed consolidated financial statements).~~corresponding change in net income at Charter.

The following is a discussion of Charter’s results of operations. In order to provide a better understanding of Charter’s operations, we have included a summarized presentation of Charter’s results from ~~operations, as well as pro forma information for the period ended September 30, 2016 as if the Transactions had been completed on January 1, 2015.~~ operations.



							Three months ended			Nine months ended
							September 30,			September 30,
							2020		2019	2020	2019

						Pro Forma
	Three months ended			Nine months ended		Nine months ended
	September 30,			September 30,		September 30,
	2017		2016	2017	2016	2016
	(amounts in millions)
							(amounts in millions)
Revenue	$	10,458	10,037	30,979	18,728	29,748	$	12,039	11,450	35,473	34,003
Operating expenses, excluding stock-based compensation		(6,784)	(6,608)	(20,033)	(12,765)			(7,414)	(7,378)	(21,972)	(21,748)
Adjusted OIBDA		3,674	3,429	10,946	5,963	10,092		4,625	4,072	13,501	12,255
Depreciation and amortization		(2,701)	(2,437)	(7,846)	(4,412)			(2,370)	(2,415)	(7,295)	(7,465)
Stock-based compensation		(64)	(81)	(198)	(168)			(83)	(71)	(263)	(238)
Operating income		909	911	2,902	1,383	2,813		2,172	1,586	5,943	4,552
Other expenses, net		(791)	(645)	(2,305)	(1,342)			(1,063)	(993)	(3,296)	(3,053)
Net earnings (loss) before income taxes		118	266	597	41			1,109	593	2,647	1,499
Income tax benefit (expense)		(26)	(16)	(99)	3,135			(177)	(126)	(372)	(329)
Net earnings (loss)	$	92	250	498	3,176		$	932	467	2,275	1,170

Charter net earnings ~~decreased $158~~increased $465 million and ~~$2,678~~$1,105 million for the three and nine months ended September 30, ~~2017,~~2020, respectively, as compared to the corresponding periods in the prior year.

Charter’s revenue increased ~~$421~~$589 million and ~~$12,251~~$1,470 million for the three and nine months ended September 30, ~~2017,~~2020, respectively, as compared to the corresponding periods in the prior year, primarily due to increases in the number of residential Internet and ~~commercial business~~mobile customers, ~~as well as~~ price adjustments and during the three months ended September 30, 2020, advertising sales offset by a decrease in ~~basic~~ video

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customers and ~~advertising sales, and in~~$218 million of estimated customer credits to be issued to video customers due to canceled sporting events. For the nine ~~month~~months ended September 30, 2020, revenue also decreased as compared to the corresponding prior period due to $85 million of waived receivables related to the ~~Transactions which~~KAC program.

During the three and nine months ended September 30, 2020, operating expenses, excluding stock-based compensation, increased ~~total revenue by approximately $11.4 billion. On a pro forma basis, assuming~~$36 million and $224 million as compared to the ~~Transactions occurred as of January 1, 2015, total revenue growth was 4.1%~~corresponding periods in the prior year, respectively. Operating costs increased primarily due to increased mobile device costs and mobile service and operating costs, and for the nine months ended September 30, ~~2017, compared~~2020, increases in costs to ~~the corresponding period in 2016.~~service customers offset by lower regulatory, connectivity and produced content costs.

~~The increase in revenue~~Programming costs during the three and nine months ended September 30, ~~2017 was partially offset~~2020 were reduced by ~~the net impact~~$163 million of an increase in operating expenses, excluding stock-based compensation of $176 million and $7,268 million, respectively. The increase in operating expenses was primarily attributable to the Transactions. Operating costs also increased due to an increase inestimated rebates from sports programming ~~costs~~networks as a result of canceled sporting events due to COVID-19 and further benefited from a higher mix of lower cost video packages within Charter’s video customer base and lower video customers. The decrease was offset by contractual rate adjustments, including renewals and increases in amounts paid for retransmission ~~consents, higher expanded basic package customers and higher pay-per-view events, offset by synergies as a result of the Transactions.~~consent. Charter expects programming expenses towill continue to increase ~~in future periods~~ 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 services. Charter has been unable to fully pass these increases on to its customers nor does ~~not~~it expect to be able to ~~fully pass~~do so in the ~~cost increases on to its customers~~future without a potential loss of customers.

Costs to service customers increased primarily due to higher labor costs resulting from COVID-19 related wage increases and flex time benefits along with 6.8% customer growth offset by a decrease in bad debt expense given the revenue write-off associated with the KAC program and better collections enhanced by government stimulus benefits.

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Regulatory, connectivity and produced content costs remained constant and decreased during the three and nine months ended September 30, 2020, respectively, due to deferred sports rights costs associated with the shortened baseball season resulting from COVID-19.

Charter’s Adjusted OIBDA for the three and nine months ended September 30, ~~2017~~2020 increased ~~as a result of the discussion above. On a pro forma basis, Charter’s Adjusted OIBDA increased by $854 million~~ for the nine months ended September 30, 2017, as a result of the discussion above, offset by increases in programming, marketing and transition costs which was offset by decreases in all other operating expense categories.

reasons described above.

Depreciation and amortization expense ~~increased $264~~decreased $45 million and ~~$3,434~~$170 million during the three and nine months ended September 30, ~~2017,~~2020, respectively, as compared to the same periods in the prior year. The increase in depreciation and amortization expense was primarily the result of higher capital expenditures in the current year, as well as additional depreciation and amortization related to the Transactions, inclusive of the incremental amounts as a result of the higher fair values recorded in acquisition accounting. Stock-based compensation expense decreased $17 million and increased $30 million during the three and nine months ended September 30, 2017, respectively, compared to the samecorresponding periods in the prior year primarily due to ~~the Transactions.~~

a decrease in depreciation and amortization as certain assets acquired in acquisitions become fully depreciated offset by an increase in depreciation as a result of more recent capital expenditures.

Charter’s results were also impacted by ~~an increase in~~ other expenses, net ~~of $146~~which increased $70 million and ~~$963~~$243 million for the three and nine months ended September 30, ~~2017, respectively.~~2020, respectively, as compared to the corresponding periods in the prior year. The increase in other expenses, net ~~was primarily due to (i) decreases of $30 million and $524 million in other pension benefits~~ for the three months and nine months ended September 30, 2017 and 2016, respectively, and (ii) $64 million and $479 million of additional interest expense that was recognized during the three and nine months ended September 30, 2017, respectively, in each case, as compared to the same period in the prior year. The decrease in other pension benefits during the three months ended September 30, ~~2017,~~2020, as compared to the corresponding period in the prior year, was primarily due to increased other pension costs and a ~~third quarter 2017 remeasurement as a result~~loss on extinguishment of ~~significant lump sum settlement payments to participants.~~debt, partially offset by increased gains on financial instruments. The ~~decrease~~increase in other ~~pension benefits during~~expenses, net for the nine months ended September 30, ~~2017,~~2020, as compared to the corresponding period in the prior year, was primarily asdue to increased other pension costs and a ~~result~~loss on extinguishment of ~~a $675 million pension curtailment gain~~debt, partially offset by ~~an $157 million net remeasurement loss recognized in 2016 that resulted from an amendment~~a decrease to the plans made subsequent to the Time Warner Cable Merger. The increase in interest expense that was recognized during the three and nine months ended September 30, 2017, respectively, as compared to the same period in the prior year, was associated with debt assumed from Legacy TWC and an increase in weighted average debt outstanding primarily due to the issuance of notes in 2017.

other expense.

Income tax expense increased ~~$10~~$51 million and ~~$3,234~~$43 million for the three and nine months ended September 30, ~~2017,~~2020, respectively, as compared to the corresponding periods in the prior year. Income tax expense ~~for~~increased during the three and nine months ended September 30, ~~2017, was reduced~~2020 compared to the corresponding periods in 2019 primarily as a result of higher pretax income offset by ~~approximately $17 million and $88 million, respectively, due to the~~increased recognition of excess tax benefits resulting from ~~share based~~share-based compensation ~~as a component~~during 2020.

Gain (loss) on dilution of ~~the provision for income taxes following the prospective application~~investment in affiliate

The loss on dilution of ~~Accounting Standard Update 2016-09. Income tax expense for the three months ended September 30, 2016 was also impacted~~investment in affiliate increased by a change in a state tax law that resulted in approximately $44 million of tax benefit. Income tax benefit for the nine months ended September 30, 2017 was a result of a reduction of substantially all of Legacy Charter’s preexisting valuation allowance associated with its deferred tax assets of approximately $3.3 billion as certain of the deferred tax liabilities that were assumed in connection with the closing of the Time Warner Cable Merger will reverse and provide a source of future taxable income.

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~~Realized and unrealized gains (losses) on financial instruments, net~~

~~Realized and unrealized gains on financial instruments, net declined $2.7~~$24.1 million and ~~$88.0~~$71.7 million ~~for~~during the three and nine months ended September 30, ~~2017,~~2020, respectively, as compared to the corresponding periods in the prior year. The realized gains during the three and nine months ended September 30, 2017 were related to the zero-strike call options (see discussion in note 3 to the accompanying condensed consolidated financial statements). During the three months ended September 30, 2016, there were no net realized or unrealized gains (losses) as we exited the derivative and Time Warner Cable shares were exchanged for Charter shares during the second quarter of 2016. The net realized and unrealized gain of $93.0 million for the nine months ended September 30, 2016, was attributable to gains in the fair value of our investment in Time Warner Cable, due to increases in the Time Warner Cable stock price during the period.

~~Gain (loss) on dilution of investment in affiliate~~

~~The loss on dilution of investment in affiliate improved $12.6 million during the three months ended September 30, 2017, as compared to the same period in the prior~~ year, primarily due to a decrease of issuances of Charter common stock from the exercise of stock options held by employees and other third parties, at prices below Liberty Broadband’s book basis per share. The loss on dilution of investment in affiliate declined $802.6 million during the nine months ended September 30, 2017, as compared to the same period in the prior year, primarily due to the Company’s increased basis in Charter as a result of the Transactions during 2016, along with an increase in issuance of Charter common stock from the exercise of stock options held by employees and other third parties, at prices below Liberty Broadband’s book basis per share. As Liberty Broadband’s ownership in Charter changes due to exercises of Charter ~~warrants and~~ stock options, a loss is recorded with the effective sale of common stock, because the exercise price of Charter ~~warrants or~~ stock options is typically lower than the book value of the Charter shares held by Liberty Broadband.

Realized and unrealized gains (losses) on financial instruments, net

Realized and unrealized gains (losses) on financial instruments, net for the three and nine months ended September 30, 2020, were primarily related to changes in fair value of the Debentures related to changes in market price of underlying Charter stock. Realized and unrealized gains (losses) on financial instruments, net for the three and nine months ended September 30, 2019, were related to the zero-strike call options. See discussion in note 3 to the accompanying condensed consolidated financial statements for additional information.

Other, net

Other, net decreased $0.3 million and $1.0 million during the three and nine months ended September 30, ~~2017 is~~2020, respectively, as compared to the corresponding periods in the prior year. The decreases were primarily ~~attributable~~due to decreases in dividend and interest income as a ~~gain on the sale~~result of ~~certain fixed assets at Skyhook~~lower interest rates and lower cash balances during the ~~year, partially offset by tax penalties. Other, net during the three and nine months ended September 30, 2016 was attributable to a gain on the sale of shares of a certain Skyhook cost investment.~~current year.

Income tax benefit (expense)

During the three and nine months ended September 30, ~~2017,~~2020, we had an income tax ~~benefit~~expense of ~~$7.3~~$25.0 million and ~~$18.2~~$47.2 million, respectively, and the effective rate was approximately ~~42.6%~~26.6% and ~~40.1%, respectively.~~26.1%. For the three and nine months ended September 30, ~~2016,~~2019, we had an income tax expense of ~~$1.7~~$9.1 million and ~~$532.3~~$8.5 million, respectively, and the effective tax rate was approximately ~~30.4%~~24.9% and ~~37.9%~~25.1%, respectively. The ~~difference~~differences between the effective income tax ~~rate of 42.6%~~rates and the U.S.

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Federal income tax rate of ~~35%~~21% for the three ~~months ended September 30, 2017 is primarily due to the effect of state income taxes~~ and unrealized gain attributable to the Company’s own stock which is not recognized for tax purposes. The difference between the effective income tax rate of 40.1% and the U.S. Federal income tax rate of 35% for the nine months ended September 30, ~~2017, is primarily due to the effect of state income taxes~~2020 and unrealized gain attributable to the Company’s own stock which is not recognized for tax purposes. The difference between the effective income tax rate of 30.4% and the U.S. Federal income tax rate of 35% for the three months ended September 30, 2016 is primarily due to the effect of state income taxes. The difference between the effective income tax rate of 37.9% and the U.S. Federal income tax rate of 35% for the nine months ended September 30, 2016 is2019 were primarily due to the effect of state income taxes.

Liquidity and Capital Resources

As of September 30, ~~2017,~~2020, substantially all of our cash and cash equivalents are invested in U.S. Treasury securities, other government securities or government guaranteed funds, AAA rated money market funds and other highly rated financial and corporate debt instruments.

The following are potential sources of liquidity: available cash balances, cash generated by the operating activities of our privately-owned subsidiaries (to the extent such cash exceeds the working capital needs of the ~~subsidiaries)~~subsidiaries and is not otherwise restricted), proceeds from asset sales, monetization of our investments, outstanding debt ~~borrowings,~~facilities, including $300 million available to be drawn under the Margin Loan Facility (as defined in note 5 to the accompanying condensed consolidated financial statements) until August 12, 2021, debt and equity issuances, and dividend and interest receipts.

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As of September 30, ~~2017,~~2020, Liberty Broadband had a cash balance of ~~$135~~$400 million.


				Nine months ended September 30,
				2020		2019

	Nine months ended September 30,
	2017		2016
	(amounts in thousands)
				(amounts in thousands)
Cash flow information
Net cash provided (used) by operating activities	$	(23,596)	(5,033)	$	(36,812)	(27,232)
Net cash provided (used) by investing activities	$	(13)	(4,990,687)	$	(14,952)	(75)
Net cash provided (used) by financing activities	$	(46,694)	4,599,682	$	402,308	(9,250)

The increase in cash used by operating activities in the nine months ended September 30, ~~2017,~~2020, as compared to the ~~same~~corresponding period in the prior year, was primarily driven by the increase in operating ~~loss, as well as the timing of differences in cash receipts and payments.~~loss.

During the nine months ended September 30, ~~2016,~~2020, net cash flows ~~from~~used by investing activities were primarily ~~related~~for the exercise of preemptive rights to ~~transactions in connection with the Time Warner Cable Merger and the Bright House Transaction, as discussed in note 4~~purchase an aggregate of ~~the accompanying condensed consolidated financial statements.~~approximately 35 thousand shares of Charter’s Class A common stock for an aggregate purchase price of $14.9 million.

During the nine months ended September 30, ~~2017,~~2020, net cash flows ~~from~~provided by financing activities were primarily ~~related to~~borrowings of $700 million under the ~~net debt repayments of $103 million~~Company’s margin loan and ~~settlement of the zero-strike call options~~Debentures (see ~~notes 3 and 6~~note 5 to the accompanying condensed ~~consolidated~~ financial ~~statements).~~

~~During the nine months ended September 30, 2016, net cash flows from financing activities were primarily related to the Company’s issuance~~statements for more information), partially offset by repurchases of ~~$4.4 billion in additional shares of~~Series C Liberty Broadband ~~Series C~~ common stock ~~to purchase $4.3 billion in shares~~ of ~~New Charter, in addition to net borrowings of $200.0 million under two margin loan agreements, entered into on March 21, 2016, between a subsidiary of the Company and the lenders thereto.~~ $285.7 million.

The projected use of our cash will be primarily to fund any operational needs of our subsidiary, to service debt, to reimburse Liberty for amounts due under various agreements, to fund potential investment opportunities, the potential buyback of common stock under the approved share buyback program and to refinance Liberty Broadband’s margin ~~loans that come due~~loan, under its Margin Loan Facility, maturing in ~~2019.~~2022. We expect ~~our potential~~corporate cash and other available sources of liquidity ~~(discussed above) and corporate cash~~ to cover corporate expenses ~~and future obligations.~~for the foreseeable future.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk in the normal course of business due to our ongoing investing and financial activities. Market risk refers to the risk of loss arising from adverse changes in stock prices and interest rates. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. We have established policies, procedures and internal processes governing our management of market risks and the use of financial instruments to manage our exposure to such risks.

We are exposed to changes in interest rates primarily as a result of our borrowing and investment activities, which could include investments in fixed and floating rate debt instruments and borrowings used to maintain liquidity and to fund business operations. The nature and amount of our long-term and short-term debt are expected to vary as a result of future requirements, market conditions and other factors. We ~~expect to~~ manage our exposure to interest rates by ~~achieving~~maintaining what we believe is an appropriate mix of fixed and variable rate debt. We believe this best protects us from interest rate risk. We ~~anticipate achieving~~could achieve this mix by (i) issuing fixed rate debt that we believe has a low stated interest rate and significant term to maturity, (ii) issuing variable rate debt with appropriate maturities and interest rates ~~and/or~~and (iii) entering into interest rate swap arrangements when we deem appropriate. As of September 30, ~~2017,~~2020, our debt is comprised of the following amounts:

Variable rate debt

Fixed rate debt

Variable rate debt

Fixed rate debt

Principal

Weighted avg

Principal

Weighted avg

Principal

Weighted avg

Principal

Weighted avg

amount

interest rate

amount

interest rate

amount

interest rate

amount

interest rate

(dollar amounts in millions)

(dollar amounts in millions)

500

2.7%

—

700

1.72%

575

2.75%

Our stock in Charter (our equity method affiliate) is publicly traded and not reflected at fair value in our balance sheet. Our investment in Charter is also subject to market risk that is not directly reflected in our financial statements.

We are exposed to changes in stock prices primarily as a result of our significant holdings in publicly traded securities. We continually monitor changes in stock markets, in general, and changes in the stock prices of our holdings, specifically. We believe that changes in stock prices can be expected to vary as a result of general market conditions, technological changes, specific industry changes and other factors. We periodically use equity collars and other financial instruments to manage market risk associated with certain investment positions. These instruments are recorded at fair value based on option pricing models.

Item 4. Controls and Procedures

In accordance with Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company carried out an evaluation, under the supervision and with the participation of management, including its chief executive officer and its principal accounting and financial officer (the "Executives"), of the effectiveness of its disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Executives concluded that the Company's disclosure controls and procedures were effective as of September 30, ~~2017~~2020 to provide reasonable assurance that information required to be disclosed in its reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

There has been no change in the Company's internal control over financial reporting that occurred during the three ~~and nine~~ months ended September 30, ~~2017~~2020 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

~~I-32~~I-29

Table of Contents

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

Our Annual Report on Form 10-K for the year ended December 31, ~~2016 includes~~2019 and our Quarterly Reports on Form 10-Q for the quarters ended on March 31, 2020 and June 30, 2020 include "Legal Proceedings" under Item 3 of Part ~~I. Other than as described in~~I and Item 1 of Part II, ~~Item 1. Legal Proceedings of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, there~~respectively. There have been no material changes from the legal proceedings described in ~~our~~these Forms 10-K and 10-Q, except as described below.

On December 19, 2011, Sprint Communications Company L.P. (“Sprint”) filed a complaint in the United States District Court for the District of Kansas alleging that Time Warner Cable, Inc. (“TWC” or “Legacy TWC”) infringed certain U.S. patents purportedly relating to Voice over Internet Protocol (“VoIP”) services. At the trial, the jury returned a verdict of $140 million against TWC and further concluded that TWC had willfully infringed Sprint’s patents. The court subsequently declined to enhance the damage award as a result of the purported willful infringement and awarded Sprint an additional $6 million, representing pre-judgment interest on the damages award. Charter has now paid the verdict, interest and costs in full. Charter continues to pursue indemnity from its vendors and has brought a patent suit against Sprint (TC Tech, LLC v. Sprint) in the United States District Court for the District of Delaware implicating Sprint's LTE technology and a similar suit against T-Mobile USA, Inc. in the Western District of Texas. The ultimate outcomes of the pursuit of indemnity against Charter’s vendors and the TC Tech litigation cannot be predicted. Charter does not expect the outcome of its indemnity claims nor the outcome of the TC Tech litigation will have a material adverse effect on its operations or financial condition.

Sprint filed a second patent suit against Charter and Bright House Networks, LLC (“Bright House”) on December 2, 2017 in the United States District Court for the District of Delaware. This suit alleges infringement of 11 patents related to Charter's provision of VoIP services (ten of which were asserted against Legacy TWC in the matter described above).

On February 18, 2020 Sprint filed a lawsuit against Charter, Bright House, and TWC in the District Court for Johnson County, Kansas. Sprint alleges that Charter misappropriated trade secrets from Sprint years ago through employees hired by Bright House. Sprint asserts that the alleged trade secrets relate to the VoIP business of Charter and Bright House. Charter has removed this case to the United States District Court for the District of Kansas.

Sprint filed a third patent suit against Charter on May 17, 2018 in the United States District Court for the Eastern District of Virginia. This suit alleges infringement of two patents related to Charter's video on demand services. The court transferred this case to the United States District Court for the District of Delaware on December 20, 2018 pursuant to an agreement between the parties.

While Charter is vigorously defending these suits and is unable to predict the outcome of the Sprint lawsuits, it does not expect that the litigation will have a material effect on its operations, financial condition, or cash flows.

On October 23, 2020, a lawsuit was filed by a purported GCI Liberty stockholder in the United States District Court for the District of Delaware under the caption Lewis Baker v. GCI Liberty, Inc., et al., Case No. 1:20-cv-01425-UNA. The lawsuit named as defendants GCI Liberty, the members of the GCI Liberty board of directors, Liberty Broadband and certain subsidiaries of Liberty Broadband. The lawsuit asserted claims under Section 14(a) of the Exchange Act and Rule 14a-9 under the Exchange Act, as well as Section 20(a) of the Exchange Act. The lawsuit alleged that the defendants caused a registration statement that omitted material information to be filed in connection with the Combination, which allegedly rendered the registration statement false and misleading. The lawsuit further alleged that the members of the GCI Liberty board of directors and Liberty Broadband acted as controlling persons of GCI Liberty and had knowledge of the allegedly false and misleading statements contained in the registration statement. The lawsuit sought an injunction barring the Combination, rescission of the Combination in the event it had been consummated, an order directing the GCI Liberty board of directors to disseminate a registration statement that did not contain any allegedly untrue statements or omit material facts, a declaration that defendants violated the Exchange Act, costs and attorneys’ fees, and other relief.

Liberty Broadband believes this lawsuit was without merit. On October 29, 2020, the plaintiff voluntarily dismissed the lawsuit with prejudice.

II-1

Table of Contents

Item 1A. Risk Factors

Except as discussed below, there have been no material changes in the Company's risk factors from those disclosed in Part I, Item 1A. Risk Factors of its Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2019 and Part II, Item 1A. Risk Factors of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

Liberty Broadband will incur direct and indirect costs as a result of the Combination.

Liberty Broadband will incur substantial expenses in connection with and as a result of completing the Combination, including advisory, legal and other transaction costs, and, following the completion of the Combination, Liberty Broadband expects to incur additional expenses in connection with combining the companies. A majority of these costs have already been incurred or will be incurred regardless of whether the Combination is completed. Factors beyond Liberty Broadband’s control could affect the total amount or timing of these expenses, many of which, by their nature, are difficult to estimate accurately. Management of Liberty Broadband continues to assess the magnitude of these costs, and additional unanticipated costs may be incurred in connection with the Combination. Although Liberty Broadband expects that the realization of benefits related to the Combination will offset such costs and expenses over time, no assurances can be made that this net benefit will be achieved in the near term, or at all.

The announcement and pendency of the Combination could divert the attention of management and cause disruptions in the businesses of Liberty Broadband, which could have an adverse effect on the business and financial results of Liberty Broadband.

Management of Liberty Broadband may be required to divert a disproportionate amount of attention away from its day-to-day activities and operations, and devote time and effort to consummating the Combination. The risks, and adverse effects, of such disruptions and diversions could be exacerbated by a delay in the completion of the Combination. These factors could adversely affect the financial position or results of operations of Liberty Broadband, regardless of whether the Combination is completed.

Liberty Broadband is subject to contractual restrictions while the Combination is pending, which could adversely affect its business and operations.

Under the terms of the merger agreement, Liberty Broadband is subject to certain restrictions on the conduct of its business prior to completing the Combination which may adversely affect its ability to execute certain of its business strategies, including the ability in certain cases to amend its organizational documents, pay extraordinary dividends or distributions or incur indebtedness. Such limitations could adversely affect Liberty Broadband prior to the completion of the Combination. These risks may be exacerbated by delays or other adverse developments with respect to the completion of the Combination.

The Combination is subject to conditions, some or all of which may not be satisfied, or completed on a timely basis, if at all. Failure to complete the Combination could have material adverse effects on Liberty Broadband.

The completion of the Combination is subject to a number of conditions, including, among other things, receipt of the required Liberty Broadband and GCI Liberty stockholder approvals, including approval of the merger agreement by the affirmative vote of holders of a majority of the aggregate voting power of outstanding shares of each company that are not owned by John C. Malone and certain other persons for each company. While the parties have agreed in the merger agreement to use reasonable best efforts to satisfy the closing conditions, the parties may not be successful in their efforts to do so. The failure to satisfy all of the required conditions could delay the completion of the Combination for a significant period of time or prevent it from occurring at all. Any delay in completing the Combination could cause Liberty Broadband not to realize some or all of the benefits, or realize them on a different timeline than expected, that Liberty Broadband expects to achieve if the Combination is successfully completed within the expected timeframe. There can be no assurance that the conditions to the closing of the Combination will be satisfied or (to the extent permitted) waived or that the Combination will be completed. Also, subject to limited exceptions, either Liberty Broadband or GCI Liberty may terminate the merger agreement if the Combination has not been completed by August 6, 2021, subject to possible extension as set forth in the merger agreement.

II-2

Table of Contents

If the Combination is not completed, Liberty Broadband may be materially adversely affected and, without realizing any of the benefits of having completed the Combination, and Liberty Broadband will be subject to a number of risks, including the following:

●

the market price of Liberty Broadband common stock could decline;

●

Liberty Broadband could owe a substantial termination fee to GCI Liberty under certain circumstances;

●

if the merger agreement is terminated and Liberty Broadband seeks another business combination, Liberty Broadband may not find a party willing to enter into a transaction on terms equivalent to or more attractive than the terms agreed to in the merger agreement;

●

time and resources, financial and other, committed by Liberty Broadband’s and its subsidiaries’ management to matters relating to the Combination could otherwise have been devoted to pursuing other beneficial opportunities;

●

Liberty Broadband and its subsidiaries may experience negative reactions from the financial markets or from its customers, suppliers or employees;

●

Liberty Broadband will be required to pay its costs relating to the Combination, such as legal, accounting, financial advisory and printing fees, whether or not the Combination is completed; and

●

reputational harm due to the adverse perception of any failure to successfully complete the Combination.

In addition, if the Combination is not completed, Liberty Broadband could be subject to litigation related to any failure to complete the Combination or related to any enforcement proceeding commenced against it to perform its obligations under the merger agreement. Any of these risks could materially and adversely impact Liberty Broadband’s financial condition, financial results and stock price.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchase Programs

In December 2016, the Board of Directors authorized the repurchase of $250 million of Liberty Broadband Series A and Series C common stock. In August 2020, the Board of Directors increased its repurchase authorization by $1.0 billion, with an aggregate repurchase amount not to exceed $1.3 billion.

A summary of the repurchase activity for the three months ended September 30, 2020 is as follows:

Series C Common Stock

(c) Total Number

(d) Maximum Number

of Shares

(or Approximate Dollar

��

Purchased as

Value) of Shares that

(a) Total Number

(b) Average

Part of Publicly

May Yet Be Purchased

of Shares

Price Paid per

Announced Plans or

Under the Plans or

Period

Purchased

Share

Programs

July 1 - 31, 2020

–

$202

million

August 1 - 31, 2020

559,621

140.89

559,621

$1,123

million

September 1 - 30, 2020

1,471,865

140.55

1,471,865

$917

million

Total

2,031,486

140.65

2,031,486

II-3

Table of Contents

There were no repurchases of ~~Liberty Broadband~~ Series A B or CSeries B common stock during the ~~period.~~three months ended September 30, 2020.

During the three months ended September 30, ~~2017,~~2020, no shares of Liberty Broadband Series A orcommon stock and no shares of Series C common stock were surrendered by ~~certain of~~ our officers and employees to pay withholding taxes and other deductions in connection with the vesting of their restricted stock.

~~II-1~~II-4

Table of Contents

Item 6. Exhibits

(a)

Exhibits

Listed below are the exhibits which are filed as a part of this Report (according to the number assigned to them in Item 601 of Regulation S-K):


~~10.1~~ 2.1		Agreement and Plan of Merger, dated as of August 6, 2020, by and among GCI Liberty, Inc., Liberty Broadband Corporation, Grizzly Merger Sub 1, LLC, and Grizzly Merger Sub 2, Inc. (incorporated by reference to Exhibit 2.1 to Liberty Broadband Corporation’s Current Report on Form 8-K (File No. 001-36713), filed on August, 7, 2020 (the “August 2020 8-K”)).
4.1		Form of Amendment No. 3 to Margin Loan Agreement and Amendment No. 2 to Collateral Account Control Agreement, dated as of August ~~31, 2017, among LBC Cheetah 6, LLC, as Borrower, various lenders and Bank of America, N.A., as Calculation Agent and Bank of America, N.A., as Administrative Agent.~~12, 2020.*
~~31.1~~ 10.1		Exchange Agreement, made and entered into on August 6, 2020, by and among John C. Malone, the John C. Malone 1995 Revocable Trust U/A DTD 3/6/1995 and Liberty Broadband Corporation (incorporated by reference to Exhibit 10.1 to the August 2020 8-K).
10.2		Voting Agreement, dated as of August 6, 2020, by and among Liberty Broadband Corporation, GCI Liberty, Inc. and the Stockholders named therein (incorporated by reference to Exhibit 10.2 to the August 2020 8-K).
10.3		Voting Agreement, dated as of August 6, 2020, by and among Liberty Broadband Corporation, GCI Liberty, Inc. and the Stockholders named therein (incorporated by reference to Exhibit 10.3 to the August 2020 8-K).
31.1		Rule 13a-14(a)/15d-14(a) Certification*
31.2		Rule 13a-14(a)/15d-14(a) Certification*
32		Section 1350 Certification**
101.INS		XBRL Instance Document* - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document*
101.CAL		Inline XBRL Taxonomy Calculation Linkbase Document*
101.LAB		Inline XBRL Taxonomy Label Linkbase Document*
101.PRE		Inline XBRL Taxonomy Presentation Linkbase Document*
101.DEF		Inline XBRL Taxonomy Definition Document*
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*

*Filed herewith

**Furnished herewith

~~II-2~~II-5

Table of Contents

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	LIBERTY BROADBAND CORPORATION

Date: November ~~1, 2017~~4, 2020	By:	/s/ GREGORY B. MAFFEI
		Gregory B. Maffei President and Chief Executive Officer

Date: November ~~1, 2017~~4, 2020	By:	/s/ ~~MARK D. CARLETON~~BRIAN J. WENDLING
		~~Mark D. Carleton~~Brian J. Wendling Chief ~~Financial Officer~~ ~~(Principal Financial~~Accounting Officer and Principal ~~Accounting Officer)~~Financial Officer

~~II-3~~II-6


State of Delaware		47-1211994
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

12300 Liberty Boulevard Englewood, Colorado		80112
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Series A common stock	LBRDA	The Nasdaq Stock Market LLC
Series C common stock	LBRDK	The Nasdaq Stock Market LLC


Large ~~accelerated filer~~ Accelerated Filer ☒		Accelerated ~~filer~~ Filer ☐		Non-accelerated ~~filer~~ Filer ☐ ~~(do not check if smaller~~ ~~reporting company)~~		Smaller ~~reporting company~~ Reporting Company ☐		Emerging ~~growth company~~ Growth Company ☐


~~Series A common stock~~		~~26,301,479~~
~~Series B common stock~~		~~2,455,179~~
~~Series C common stock~~		~~153,089,705~~

f
	Page No
Item 1. Financial Statements
LIBERTY BROADBAND CORPORATION Condensed Consolidated Balance Sheets (unaudited)	I-2
LIBERTY BROADBAND CORPORATION Condensed Consolidated Statements of Operations (unaudited)	I-3
LIBERTY BROADBAND CORPORATION Condensed Consolidated Statements of Comprehensive Earnings (Loss) (unaudited)	I-4
LIBERTY BROADBAND CORPORATION Condensed Consolidated Statements of Cash Flows (unaudited)	I-5
LIBERTY BROADBAND CORPORATION Condensed Consolidated ~~Statement~~Statements of Equity (unaudited)	I-6
LIBERTY BROADBAND CORPORATION Notes to Condensed Consolidated Financial Statements (unaudited)	~~I-7~~I-8

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	~~I-23~~I-21
Item 3. Quantitative and Qualitative Disclosures about Market Risk	~~I-32~~I-29
Item 4. Controls and Procedures	~~I-32~~I-29

Part II - Other Information

Item 1. 1. Legal Proceedings	II-1
Item 1A. Risk Factors	II-2
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	~~II-1~~
~~Item 6~~. ~~Exhibits~~	~~II-2~~

~~SIGNATURES~~	II-3
Item 6. Exhibits	II-5

SIGNATURES	II-6


	September 30,		December 31,
	2017		2016
	(amounts in thousands)
Assets
Current assets:
Cash and cash equivalents	$	135,425	205,728
Trade and other receivables, net		2,233	878
Derivative instruments		—	49,019
Other current assets		4,319	2,794
Total current assets		141,977	258,419
Investment in Charter, accounted for using the equity method (note 4)		9,326,871	9,315,253
Property and equipment, net		425	710
Goodwill (note 5)		6,497	6,497
Intangible assets subject to amortization, net (note 5)		6,063	8,596
Other assets, at cost, net of accumulated amortization		61	1,485
Total assets	$	9,481,894	9,590,960
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities	$	4,963	7,931
Deferred revenue		6,684	2,171
Current portion of debt (note 6)		—	400,000
Other current liabilities		553	2,014
Total current liabilities		12,200	412,116
Debt (note 6)		496,975	198,512
Deferred income tax liabilities		497,414	504,644
Deferred revenue		3,765	2,596
Other liabilities		1,305	—
Total liabilities		1,011,659	1,117,868
Equity
Preferred stock, $.01 par value. Authorized 50,000,000 shares; no shares issued		—	—
Series A common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 26,301,387 shares at September 30, 2017 and 26,251,533 shares at December 31, 2016		262	262
Series B common stock, $.01 par value. Authorized 18,750,000 shares; issued and outstanding 2,455,179 shares at September 30, 2017 and 2,467,509 shares at December 31, 2016		25	25
Series C common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 153,089,705 shares at September 30, 2017 and 153,019,547 shares at December 31, 2016		1,531	1,530
Additional paid-in capital		7,952,316	7,945,883
Accumulated other comprehensive earnings, net of taxes		8,290	7,656
Retained earnings		507,811	517,736
Total equity		8,470,235	8,473,092
Commitments and contingencies (note 8)
Total liabilities and equity	$	9,481,894	9,590,960


							Accumulated
						Additional	other
	Preferred		Common stock			paid-in	comprehensive	Retained
	Stock		Series A	Series B	Series C	capital	earnings	earnings	Total equity
	(amounts in thousands)
Balance at January 1, 2017	$	—	262	25	1,530	7,945,883	7,656	517,736	8,473,092
Net earnings (loss)		—	—	—	—	—	—	(27,286)	(27,286)
Other comprehensive earnings		—	—	—	—	—	634	—	634
Stock-based compensation		—	—	—	—	4,017	—	—	4,017
Issuance of common stock upon exercise of stock options		—	—	—	1	2,416	—	—	2,417
Cumulative effect of accounting change at Charter (note 4)		—	—	—	—	—	—	17,361	17,361
Balance at September 30, 2017	$	—	262	25	1,531	7,952,316	8,290	507,811	8,470,235


	Liberty Broadband Common Stock
	Three months	Three months	Nine months	Nine months
	ended	ended	ended	ended
	September 30, 2020	September 30, 2019	September 30, 2020	September 30, 2019

	(numbers of shares in thousands)
Basic WASO	181,472	181,522	181,765	181,409
Potentially dilutive shares (1)	1,031	1,451	953	1,377
Diluted WASO	182,503	182,973	182,718	182,786


	Liberty Broadband Common Stock
	Three months	Three months	Nine months	Nine months
	ended	ended	ended	ended
	September 30, 2017	September 30, 2016	September 30, 2017	September 30, 2016
	(numbers of shares in thousands)
Basic WASO	181,846	181,621	181,795	142,170
Potentially dilutive shares (1)	1,485	970	1,369	666
Diluted WASO	183,331	182,591	183,164	142,836



~~Volatility~~		~~21.1%~~
~~Interest rate~~		~~1.3%~~
~~Dividend yield~~		~~0.0%~~


	September 30, 2017				December 31, 2016
	Gross			Net	Gross		Net
	Carrying		Accumulated	Carrying	Carrying	Accumulated	Carrying
	Amount		Amortization	Amount	Amount	Amortization	Amount
Acquired patents	$	10,823	(9,633)	1,190	10,823	(8,450)	2,373
Customer relationships		10,213	(6,463)	3,750	10,213	(5,440)	4,773
Tradename		2,838	(1,809)	1,029	2,838	(1,528)	1,310
Capitalized software		857	(763)	94	850	(710)	140
	$	24,731	(18,668)	6,063	24,724	(16,128)	8,596


				Weighted
				average
				remaining	Aggregate
				contractual	intrinsic
	Series A	WAEP		life	value
	(in thousands)			(in years)	(in millions)
Outstanding at January 1, 2017	454	$	32.47
Granted	—	$	—
Exercised	(49)	$	26.85
Forfeited/cancelled	—	$	—
Outstanding at September 30, 2017	405	$	33.15	2.2	$	25
Exercisable at September 30, 2017	402	$	33.06	2.2	$	25


	Three months ended September 30,
	2017			2016
			Adjusted		Adjusted
	Revenue		OIBDA	Revenue	OIBDA
		(amounts in thousands)
Skyhook	$	3,430	(980)	20,616	11,422
Charter		10,458,000	3,674,000	10,037,000	3,429,000
Corporate and other		—	(2,366)	—	(2,091)
		10,461,430	3,670,654	10,057,616	3,438,331
Eliminate equity method affiliate		(10,458,000)	(3,674,000)	(10,037,000)	(3,429,000)
Consolidated Liberty Broadband	$	3,430	(3,346)	20,616	9,331


	September 30, 2017
	Total		Investments	Capital
	assets		in affiliates	expenditures
	(amounts in thousands)
Skyhook	$	26,136	—	27
Charter		148,228,000	—	6,096,000
Corporate and other		9,455,758	9,326,871	—
		157,709,894	9,326,871	6,096,027
Eliminate equity method affiliate		(148,228,000)	—	(6,096,000)
Consolidated Liberty Broadband	$	9,481,894	9,326,871	27

Liberty Broadband Corporation Common Stock