Charter Communications, Inc. (CHTR) Earnings Call Transcript & Summary

Good morning. I'm Vijay Jayant, media communications analyst at Evercore ISI. We have Chris Winfrey, the Chief Financial Officer of Charter Communications. Chris, thanks for joining our inaugural TMT conference. Hopefully, one day, we can do this in person. My colleague, James, and I will run through a bunch of questions if that's fine. So welcome, Chris.

Good. It's good to be here with you both.

So I thought I'll start with probably the most topical question that we get is on broadband. Can you sort of tell us why you remain so confident in your ability to grow broadband customers over the long term?

Sure. If you look at the quality of our product, the demand for our product, which has really, in all likelihood, been enhanced long term because of what's happened over the past year, we're heavily underpenetrated relative to our product capabilities and the demand. And so we've been a fast grower. We think we'll continue to be a fast grower. And part of the reason that's the case is that we continue to increase the speeds and the utility of the product and add additional services in a way that most of our competitors can't replicate the packages, the services that we provide around broadband. We do that with in-house, onshore, high-quality service. And we view that as part of our product. And finally, we keep our prices low despite the temptations or the suggestions of some of our investors to take them up so that we increase the utility of the overall broadband product and the overall package. And when you put that together with high-quality service, it means that not only do you have an attractive product at the time of acquisition, but your customers want to stay with you longer. We create a financial incentive and a product incentive for them to not want to look anywhere else for product. And as a result, the churn is low and the return on investment is high because the customer lives are long. And so all of that, so both from an acquisition standpoint where our product is very attractive and there's high demand for it, but also from a retention standpoint, our operating strategy is designed to value the long customer lives that our operating model produces. And so I think we're early on. Now I talked about some of the additional products that we've added on, and I'm sure you want to talk about it more later. But it's very early days for mobile. And I think mobile has the opportunity to increase, as I mentioned, the utility of the overall package we provide but really act as an extension of the broadband service that we can save like we always have. Part of our strategy is to save customers a lot of money, and we can both increase our broadband and connectivity share and, at the same time, save customers significant amounts of dollars every month, every year. And that's a great way to grow, and that has a long runway for us. So I'm pretty optimistic about our runway for growth in broadband and all of our products.

Looking at a couple of like specific opportunities, obviously, the Emergency Broadband Benefit program has already added, I think, over 2 million customers. Do you expect that to be a big driver of growth in terms of subscribers and ARPU?

I think there's been several operators out already who have commented that most of that take-up is coming from existing subscribers as opposed to driving new subscribers. And that's no different for us. It is not a major source of what I would call incremental new acquisition for us. And to the extent that it's material in our net add rate, we'll certainly talk about it and find a way to give proper disclosure to it. But right now, similar to other people, it's been much more about take-up from our existing subscribers, which I think is beneficial. It's helping out the consumer, which it was designed to do. And the affordability of broadband over time, probably not within inside this quarter but over time, could that help out in terms of customers being able to keep their services longer than they would have been able to otherwise because of financial distress? I think so, particularly if that program ends up somehow getting reconstituted into a more long-term structural offering for customers who have a financial need. And all of that, I'm sure, will get worked out over the next 6 months or so. So we're looking forward to that.

The other area that you guys have shown interest in is on the sort of expanding your network into rural America, the RDOF auction you guys have been successful on. Anything you can share about what you think the opportunity there is, apart from just what you have right now but above and beyond that?

Yes, and expanding into rural is not new for us. If you take a look at our passings growth rate and what we've been doing and where we've been spending on line extensions, it's not new. We've talked about accelerating that through both the Rural Digital Opportunity Fund as well as state funding, additional federal funding to the extent that exists as well as by doing this, there are what we call white spaces that are unserved today that become more attractive to build because of some of the subsidized build that's going to take place. So I think the legs of build growth here could be extensive over a long period of time. We've been at it. We know what we're doing. We think we have the ability to scale. It's not easy, particularly when you operate over such a large geography that we do. But I think there will be an opportunity to increase our growth rate from subscribers as a result of that build-out and, clearly, revenue and EBITDA. But that's going to take time. When you think about an incremental uplift from where we already are today, people will see the impacts of what we're doing for rural build. Our plan is to disclose not only the capital expenditure but also the passings growth specific to the rural build-out as well as the incremental revenue that's coming out of those passings. I think the revenue, for it to have a material impact, it's going to take a fair amount of time to demonstrate just because the deal process is long. And we're going to try to grow as fast as we can. So what investors will see first is really the capital expenditure that's tied to the design and planning, the walk-out and the construction of these passings before they're ever marketable. So there'll be a good period of time where there's CapEx and there actually isn't any subscribers because they're not open for marketing, they're not open for penetration. But over time, as the penetration of the earlier vintages starts to catch up to the CapEx, you'll start to get a good feel over a multiyear period of the ROI of that investment. So we've been doing this for a long time, not just because we think there's good financial returns to it but we think it's good business. And providing broadband service to the underserved is -- and the unserved, in particular, has been part of our strategy all along.

Within your existing footprint, you've been pretty sanguine about the likely impact of fixed wireless and also additional fiber builds by AT&T or others. Does it seem likely that at least a material portion of the area where you don't have the robust competitors, say, greater than 25 megabits, will get it and if the dynamic in those areas might change pretty meaningfully?

Yes, I think it will change. We've faced competition ever since we existed. Sometimes that was DSL, but it's always been wireless as well. So if you think back to whether it was MMDS and/or MMDS, LMDS, 3G, 4G, now 5G, fixed, wireless versions and whatnot, we've always faced that competition. And we continue to face that competition today. And the answer to that is a good one for consumers, which is that therein lies the incentive for us to continue to invest in our product, invest in speeds. As a result of investing in the network, product and speeds, what ends up happening is consumer demand for higher speeds develops into the speeds that we provide on our network, which then provides some additional distance. And by keeping our prices low and our service quality high, together with all of that, we've been able to keep a step ahead. But I would say I agree with you that wireless competition is something that we're going to continue to face. This is the next phase of it, and we've been through many of those phases. And I think it's good for consumers, and it's good for us in the long run. So I think nothing I would say that's particularly new relative to what we faced in the past.

You've talked obviously about the extension -- wireless being sort an extension of your broadband product already. And I think you recently mentioned that at peak, you might see wireless tell it to broadband at similar rates to what you saw wireline. Can you sort of talk about why you feel confident on that? And broadly, just what is the ultimate goal on the wireless product? Because it looks like it's driving other products rather than being sort of a profit generator itself.

Sure. Well, tied into a little bit of what James was just asking, while the wireless operators have always been competitive to us on broadband, now we're in a position where we're entering into the wireless and the mobility space to bring competition there, too. And so part of our rationale here is -- our rationale is really multipronged. The first is that people's expectations for Internet and its utility has changed over time. It used to be through an Ethernet connection to the computer. Then it used to be the quality of the WiFi in your kitchen and your family room. Now it really extends out into the terrace or the patio. And it goes beyond. And so people's definition -- and so when they're looking at their device, they're really not thinking about, "What service am I on?" They're thinking what's the quality of my Internet connection. So for us, the extension of Internet beyond the home or the business really is a natural extension of the Internet product that we already provide. And on a mobile device, 80% of the traffic or 75% to 80% of the traffic is already going over our WiFi networks anyway. So it was a natural place for us to go. When we are doing that, we're able to do that with a profitable product due to the high-quality MVNO that we have. And so there's an opportunity to have -- even if you looked at it on a stand-alone business, which isn't how we looked at it, to be incrementally profitable with the mobile product even without including some of the benefits, which I think could be significant to our broadband effort. The final leg is that because WiFi continues to get better, meaning we have additional throughput, we have additional reach, and because we've invested in CBRS license and have the ability to have unlicensed spectrum, there's an opportunity to have enhanced offload of our traffic onto our network, which is already very high with WiFi and to not only improve our economics around our mobile product if it were a stand-alone product, which it's not, but to actually have a higher-quality mobile product than anybody else can provide and to have a higher-quality Internet product in the home, in the business, outside the home, in the neighborhood, wherever they are. And maybe it's only at parity when you're out on the highway. And so that's a pretty attractive proposition for us. And because it's an extension of our Internet product and because we don't think that mobile is a product on a stand-alone basis, I think it gives us the long-term advantage of being able to price that very attractively and save customers money in a way that our competitors can't. And so we can keep our prices low and we can actually save them significant amounts of dollars on their mobile service. And we can drive broadband growth, which is really where you open the conversation because we don't view mobile really as a stand-alone product. And while it will be profitable on a stand-alone basis, it's not how we think about it as the overall value that it brings to the business, which is, I think, the essence of the question you were asking.

Yes. But one of your largest shareholders more recently said, I think, that stand-alone EBITDA and wireless could be over $1 billion in 2025. I'm not trying to sort of force you to validate that.

No. Look, one of our largest shareholders is Liberty Broadband. And I suspect that was Greg Maffei, and he's a very smart man. And so just because intellectually, what I said may resonate with everybody and strategically may make a lot of sense, it doesn't mean that we don't have to demonstrate that there's still financial discipline and that the option value and the upside that I described is backed up by a core EBITDA profitability even if it were on a stand-alone basis. And so we've gone out of our way to really for illustrative purposes to show to the investor community for a period of time that if you were to look at it on a stand-alone basis, that it's already profitable today when you take out the growth cost. So if you stopped acquiring customers, it's already profitable today. And together with our own results and the way that we've described and the transparency that we provided, together with what you've already seen from Comcast, who has the same economics, we've proven that out to our investor base as well as, frankly, our Board, from making sure that they understand the discipline that exists inside the business as we roll out these new products. But it isn't just about some sort of intangible strategic value or build it and they will come. But you can actually see on a stand-alone basis that this has good accounting like value creation for the company as well.

Got it. Just moving to CBRS. Obviously, you have some spectrum there. And you've obviously talked about offloading capacity from your -- on the wholesale capacity to your own network over time. Anything you can share about trials, economics of what the value of that can be versus the cost to deploy the CBRS network? Are...

Sure. So I don't want to get into unit economics or whatnot for competitive purposes. But this is new territory for us. And because it's new territory, very different -- for example, for our cable rural build-out, where we can have long paybacks, to do something like this means that the paybacks need to be really clear. And they need to be fairly short as it relates to our typical capital investment cycle. And that's the case with the CBRS rollout. So without getting into too many details, I would just say that it is a short multiyear payback when we can roll out CBRS based on the number of customers and traffic that exist at that point in time. Interestingly, the more success we have in penetrating a market with mobile lines, the more success we have with penetrating more mobile lines inside of a footprint. And the more incentive we can create for customers to actually use more of it and have more data, the more financially attractive it becomes for us to go build additional CBRS, either into a new market or to continue to densify that market through the use of our licensed and unlicensed spectrum. So it is a virtuous cycle of value creation and investment that's all tied together, which really has always been our philosophy is that growing fast is a great way to deliver long-term cash flow growth. It's a lot better than trying to take up your prices or to slash cost. But by having a high-growth business that's customer-friendly, that creates value, that drives growth which further incentivize investment is really a healthy way to grow. And that's fundamentally part of our operating and financial value creation strategy.

So do customers need smartphones with dual SIMs with CBRS? Are you doing that with your handsets yet? Or is that...

They will. The entire industry is moving that direction. And so you're right to point out it's not just a function of the number of mobile lines that we have today. But as new phones are coming into the marketplace, certainly, all the mid- to high-level phones are already equipped with and will be equipped with the technology that allows us to, from a software perspective, switch over between networks. And so the population of new phones into the marketplace further enhances our ability to get that offload. But given the life cycle of cellular devices, you're talking a couple of years before you start to see the majority of phones actually have that capability inside them. So I don't think that this is a -- the launch of CBRS and the build-out of CBRS isn't something that we have to do fast. We're going to be able to go at our own pace, based on all the factors that we just talked about, which is the seeding of phones in the marketplace, the number of lines that we have in a particular market, the amount of traffic taking place. And at a point in time where we determine that the ROI is guaranteed in the bag and attractive enough, that's when we're going to launch that market or further densify that market. So this isn't -- we have a great product today that's already the fastest mobile product in the entire country even before we get to CBRS. And that's because of our ability to not only piggyback on the Verizon network for 20%, 25% of our footprint but to also have a more integrated approach to WiFi offload with the nation's fastest WiFi in spectrum. And it works better as a result. And as a result, we have the fastest mobile product. We have the fastest-growing mobile net adds in the country today. And we're delivering that at the cheapest price. If you go back to where we started the conversation, that's a pretty good combination to have in terms of driving up your broadband connectivity. And we have a lot of room to enhance on all of those factors to keep that growing for a long time.

So I think you have about 20 megahertz of CBRS across your -- most of your footprint. This 3.5 gigahertz auction coming later this year, is that something you think you might need? Or is what you have enough for what you're sort of contemplating longer term?

Yes. We don't need any additional spectrum. And so the CBRS that we have today, it's opportunistic, it's very good. And it gives us the opportunity to not only have the license piece but because of the nature of our network and how fully distributed it is with fiber powering right away the ability to deploy for both our licensed and unlicensed in a way that others really can't. The CBRS was also unique to us in that it was auction dealt on a county-by-county basis, which is good for competition. And it brought in more of the cable operators into the space, as you can see. But also because of its low-power nature, it was less valuable to some of the MNOs than, say, for example, C-band. And so it was unique for us in terms of our ability to acquire some of that spectrum and use it to be competitive. So I think the FCC did a fantastic job in administering that and thinking through that auction and creating additional wireless and broadband competition as a result. The 3.45 to 3.55, my understanding is that's going to be auctioned off on a PEA basis, unfortunately, which is going to make it a little bit harder for us. So I'm not saying whether we would or wouldn't participate in that but I think it's a little more challenging there. And we're going to be financially disciplined. And so a bit more challenging than, say, for example, the CBRS.

Just one more on wireless. Obviously, Comcast recently introduced a multiline discount about a month or so ago. What's your approach to going out to multi-line homes?

Well, as you know, from an operations perspective, we have a wireless JV with them. We have the same MVNO that works really well. We have a great partner in that MVNO. I think what we're doing despite everything that I said actually works well for them because we're going to generate a significant amount of wholesale revenue to our MVNO partner. But it also means that because we have the same product in essence and because we have same type of back-office operations and the same economics that we can watch what the 2 companies are doing. I think in a recent conference, they mentioned they're going to watch what we're doing in CBRS. I think I've also said we're watching what they're doing on multi-line. But I think you can expect that we will do something to make the multi-line environment more attractive, similar to what Comcast has done. And I think what they've done is smart, and we're watching it. And we'll have our own news at some point. There's no rush. But I'm curious to see how that begins to work for them.

You talk a bit about network investment and construction. How much of your footprint expansion is being done with fiber-to-the-home at this point? I think you said RDOF is going to be all FTTH. And how does FTTH compare to HFC new build in terms of cost to build, cost to operate, et cetera?

Yes. So upfront, I would tell you that the technical capabilities long term of fiber-to-the-home and HFC network, there's really no material difference because of what we can do today under DOCSIS 3.1 and the development of DOCSIS 4.0. But what we think about when we're looking at that environment is if you're building greenfield construction, your ability to service that environment. And so we want the fiber-to-the-home passings to be sufficiently large so that when you're outfitting trucks and you're training techs that you can have scale in the marketplace for the type of technology that you're servicing. And so we take a look at that when deciding when to go between HFC and fiber-to-the-home. Because rural provides that type of scale, we are typically almost entirely going with fiber-to-the-home in those footprints. We typically build out MDUs with fiber as well and increasingly more in a fiber environment. It's actually, when you think about RDOF and you think about the rural footprint, in addition to the commitments that we've made around that, it's more economic in a rural setting because there's less actives in the network. And so the -- while the cost of the physical fiber is actually higher than the cost to the HFC, the lack of actives and a certain amount of density means that fiber-to-the-home is actually more economical to build. So it's a bunch of factors that we think about. But at the end of the day, our ability to deliver the same type of products over either 1 of those 2 network infrastructures is really the same.

You brought up actives. So yes, talk about the RF part of the network, everybody's favorite topic. On a recent call, Tom mentioned the potential to increase the HFC network to 1.2 gigahertz in order to add capacity. What sort of changes both to the actives and to the passives, taps, splitters, et cetera, would be necessary to make those sorts of upgrades?

Sure. So the upgrade to 1.2 gigahertz, it's called a high split. And it's very economical for us. And it provides the ability not only to substitute that type of upgrade for node splits that we do today. So economically, over a mini-multiyear period, it could put you in a position where you're economically indifferent. But it could enhance your product capabilities if there was demand for it to go to multi-gig downstream and a gigabit upstream using that high-split upgrade. The cost of it probably more than what we had from a DOCSIS 3.1 perspective, for sure. But incrementally, relative to the node splits that we would do otherwise, it's debatable, depending on which time period you look at it. If you look long enough, you could argue that it's somewhat neutral. By that, I mean several years. The -- so the actual physical infrastructure changes are really inside the actives. So in some cases, that's going into the node and swapping out a card. In some cases, you have to swap out a node and an amplifier. But it's only on the actives. There's no upgrade that's required as it relates to the passives, so splitters, taps. And so a significant cost avoidance by not having to touch that portion of the network. We're not actually touching the actual network itself. So it's really just these elements. And there's no change-out required for any of the -- any material amount of the eMTAs or modems that we have today, those DOCSIS 3.1 modems that we have since 2017. We've been buying modems that are fully capable under a high-split environment. And so the ability to go into a marketplace and pretty quickly at a relatively low cost and generate a significant amount of capacity increase that you can decide later how you're going to use is pretty substantial. It's attractive. It may not be a long-term permanent strategy, but it buys you a lot of time in terms of thinking through the other ways. We are developing DOCSIS 4.0. Our commitment to that is unwavered. We're going to be delivering DOCSIS 4.0. But this gives you an additional way to address contention and maybe to have additional product capabilities in the interim while we're developing DOCSIS 4.0 with some of the key vendors.

Got it. When you talk about pricing for a bit, when you acquired TWC, you did a lot of work to increase pricing standardization. You obviously have thousands of different rate plans on the books. How much are you differentiating by market and by customer? And how do you think about the trade-offs of standardization? You get efficiency, you get simplicity versus being more targeted and -- in your promotion and retention.

Sure. So look, the -- like anybody, we do have promotional pricing and we have retention in certain circumstances and certain environments, but the key there is that our retail pricing, so after the promotional period, is consistent nationwide. And so what we like to do that is -- the reason we like to do that is for many reasons. One is having a national standard ensures that from a service perspective, the ability of our agents, which is a relatively high turnover environment, training is key to be able to service those customers, is enhanced by having simplicity and by having standard nationalized pricing. The other benefit of that is when we think about the competitiveness of our rates, it's not just the competitiveness of the promotional rates, but it's the competitiveness of the retail rates, so after the promotion. And whether we have a fiber over builder or wireless broadband competitor or we just have DSL in a particular market as competition, we think about it not only for the competition that's there today, but what is your pricing structure doing to invite competition in the future? So we prefer to keep our rates low, not only for the competition that exists there today but for the competition -- the incremental competition that would come if you didn't behave like there was already competition there today so. It's a disincentive for others to invest. And we'd rather grow by driving additional penetration in that market. We'd rather grow by putting additional PSUs into the customers' homes and to save them money with mobile despite the temptation to have differentiated retail pricing, which is not part of our strategy. But to be clear, in certain environments, we're fully willing and capable to get promotional and to use retention in a very disciplined way as long as our retail prices nationally are consistent to be able to provide a better service infrastructure.

So Chris, moving to operating costs. Obviously, on the programming side, some of your key programming providers are -- have launched direct-to-consumer propositions. And obviously, they will come and ask for a step-up in rates every year like they do. So can you sort of talk about where are we in the thinking of given this alternative competition you're seeing from your key vendors? How do you think about programming costs? Is it as simple as if I didn't have this program, I would lose X number of subscribers, and that's how the cost-benefit analysis is? Or is there something much larger that you have to have certain amount of content just to be in the business? So just anything you could sort of talk about that.

Yes. It's more complicated than just the math of how many subscribers you think you would lose from a video perspective. So some of what I'm about to say is going to be, by its nature, contradicting. For us, having a high-quality video package that's available in the home, out of the home, on essentially every device that the customer has, through our own set-top boxes, through their own personal devices, as I mentioned in the home or out of the home, is really important. And it's important because it's an application to the connectivity service that we provide, both as part of Internet as well as part of mobile. And it is a medium that despite its economics and the trend of those today, everybody wants to have. We have a video product that's still profitable, including advertising or without. And so we still like the video business. And that means having an attractive product that can be packaged for different types of customers in a way that meets their budget and meets their content viewing requirements. And because of where we stand today relative to our competitors, we're still committed to the video business when most of our competitors have melted away. So I think it could produce a real advantage for us in the future in terms of our ability to sell products. Now having said all that, the pricing of that continues to go up. And it's become unaffordable for a large portion of the population as a result of what the programmers have done. And we've eaten a lot of that, but we are now passing through those programming increases to our customers. And so there is coming a point where I do think you'll see certain content either being dropped or needing to permit the flexibility for operators like ourselves to package in a really different way to create value for consumers so that their product can be viewed. That's coming about not only because of the price increases that they're taking on distributors like us but making that product available in some cases at a very low rate and in many cases for free. And in some cases, that's intentionally for free. And a lot of cases, that's unintentionally for free because there's no security attached to the DTC platform that they're distributing, and passwords are being actively shared. And there's really nothing being done to stop it. And so the value of their content has been devalued in every way. And at the same time, they're asking people to pay more and not have flexibility on packaging. I know we've been talking about that for years, but I think those days are numbered, and something is going to have to give. Having additional flexibility would be helpful. Having lower rates certainly would work. And if we can't get some of those items, I think you're going to see very serious discussions around just directing our customers to alternative ways to view that content enough. So where -- I'll go back to where I started. It's still in our interest to have a high-quality video package and one that can be tailored to meet the needs of customers based on their budget and their viewing habits. So there's tension in that. And we're trying to manage through it and find ways to partner with the programmers as they transition their business to ultimately what I don't think is going to be as profitable. But we're rolling with the environment and hope to provide good value to our customers one way or another.

Just sticking on some of the cost side. Obviously, you guys had a wage increase last year. And again, there's another tranche, I think, this year. Just broadly speaking, how are you finding your ability to hire and retain people? And I just want to bring in sort of the inflation topic into it given it's become a bigger macro topic right now. Are you seeing any real inflationary aspects on your cost side right now?

Well, the inflationary aspects we've done ourselves, which is take our wage increase up. And that's the biggest one. We did that, as you mentioned, last year and accelerated our path to $20 minimum wage, which drives wage rate increases across the board to avoid compression. And we had the second wave of that take place already inside of March this year. We thought it was the right thing to do. Similar to rural build-out, we thought wage increases were the right things to do prior to being more popular. And so we had already done that level of inflation to ourselves. I do think there are additional short-term supply chain constraints that exist in the marketplace today, whether that's related to chips or whether it's related to labor availability that I do think are temporary. I think they go away when the economy gets back to work. And I think that will take place at the end of the summer. And so I expect things to start to return more to normal. That's certainly our hope. Because we took the wage increases, our retention is way higher than I think it would have been otherwise. And I think our employees really value what we did and what we stand for. The ability to hire is more difficult now than it's been despite our higher wages. And that's because of some of the incentives that exist in the marketplace. But like I said, I'd expect that to start to return to normal by the end of the summer. And in certain states, where some of those incentives are being removed already, I think you'll start to see a return to normal faster in those states.

I think I'd be remiss if I didn't ask a question on leverage and return on capital. So can you kind of discuss what you think about your target leverage over the long term? Obviously, we are seeing, based on some of your shareholders selling, pretty substantial buybacks both in 1Q and where you are in 2Q.

Sure. Our target leverage, we maintain a pretty robust review of that target leverage, both from an academic to sort of typical CAPM or weighted average cost of capital model, taking a look at where you're optimized. That's consistently come back and sat at 4 to 4.5x as well as more of a qualitative, which is taking a look at what's the level of cash flow growth that you expect through the business, which allows you to sustain leverage, where our visibility is high and our confidence continues to be high. The other area is the amount of towers for refinancing that are coming up, and so how much needs to be refinanced in the short term. And we've been successful in moving those towers out significantly over time, and the interest rate environment, which as you know, has remained low. So we don't see any reason to change our target leverage from the 4 to 4.5x. And we've been staying at the high end of that due to confidence in all of those factors that I just described. You mentioned shareholders participating in the buyback. It's really Advance/Newhouse who, since we started buybacks, likes the position that they had. They were the previous owners of Bright House, put that inside Charter. They took essentially the vast majority in equity. And so this has been a way for them to diversify their overall portfolio through just taking a pro rata sell-down and maintaining their interest in Charter. So that's nothing new. And for Liberty Broadband, their selling pro rata to the buyback isn't a function of desire. It's a function of what was agreed in the shareholders' agreement at the time they did the Time Warner-Bright House deal. It turns out it ends up being pretty economical for them. And so I'm pleased about that. But that was simply a function of what was under the shareholders' agreement and honoring that so that we had a certainty for the public shareholders as to where the ownership of certain shareholders could go.

Just one on regulation while we have you. It looks like a reintroduction of some form of net neutrality rules is kind of a foregone conclusion at this point. What, if anything, did you do differently under the Wheeler net neutrality rules versus after they were reversed by Chairman Pai?

Yes. Look, I don't know that there's any foregone conclusions about any regulation at this point. There's a lot that's up in the air, and I can't sit here and tell you I know exactly where it's going. But I take comfort in our operating strategy having always been designed to operate in a multitude of different regulatory climates. Business model -- our operating model, business model is designed for that. And so there's been no change under any of these administrations in terms of how we operate our network. We don't throttle. We don't offer paid prioritization. Even -- while that's not part of net neutrality, we don't cap. We haven't -- we want people to use as much of our product as possible. We believe in privacy. We believe in security. And that's going to exist under any administration or any regulatory regime because we think it's right for customers, all of it. So I know there's a big debate about that, and there's capital market fears. But we've always operated our network in favor of net neutrality. We've had issues around what people would call Title II and the potential for rate regulation, of course. But in terms of real net neutrality, we haven't changed the way we operate our network. And we think about the customer in everything that we do.

Chris, I think we've stayed past our allotted time. Thank you so much for taking the time this morning to chat with us.

It's great to see you both.

Thanks, Chris.

We'll see you in person next time. Take care.

Looking forward to it.

Bye.

Bye.