CCO Holdings LLC

11/06/2026 | Press release | Distributed by Public on 11/06/2026 06:09

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
General
CCO Holdings, LLC ("CCO Holdings"), through its Spectrum brand, is the leading Internet and video provider in the nation and the fastest growing mobile company in our footprint, with services available to more than 70 million homes and businesses across 45 states.
CCO Holdings is a holding company whose principal assets are the equity interests in its operating subsidiaries. CCO Holdings is a direct subsidiary of CCH I Holdings, LLC, which is an indirect subsidiary of Charter Communications, Inc. ("Charter"), Charter Communications Holdings, LLC ("Charter Holdings") and Spectrum Management Holding Company, LLC. All of the outstanding capital stock of CCO Holdings Capital Corp. is owned by CCO Holdings. The consolidated financial statements include the accounts of CCO Holdings and all of its subsidiaries where the underlying operations reside. At the closing of the Cox Transactions (as defined below), the limited liability company agreement of Charter Holdings was amended and restated by and among Charter, Advance/Newhouse Partnership ("A/N"), Cox Communications Equity Holdings, Inc. ("Cox Equity Holdings"), a wholly owned subsidiary of Cox Enterprises, Inc. ("Cox Enterprises"), and the other parties thereto. All significant intercompany accounts and transactions among consolidated entities have been eliminated
The Cox Transactions
On August 19, 2026, the transactions contemplated by the Transaction Agreement, dated May 16, 2025, by and among Charter, Charter Holdings, and Cox Enterprises were completed (the "Cox Transactions"). In the Cox Transactions, Charter acquired Cox Communications, Inc.'s ("Cox Communications") residential cable business, which was contributed to Charter Holdings in exchange for Charter Holdings common units, Charter Holdings convertible preferred units and cash, and Cox Communications' commercial fiber and managed IT and cloud services businesses, which Charter purchased for cash. Cox Equity Holdings received a noncontrolling interest in Charter Holdings and one share of a new class of Charter voting stock. See Note 2 to the accompanying consolidated financial statements contained in "Item 1. Financial Statements" for more information.
Liberty Broadband Transaction
On August 19, 2026, the transactions contemplated by the Agreement and Plan of Merger, dated November 12, 2024, by and among Charter, Liberty Broadband Corporation ("Liberty Broadband"), Fusion Merger Sub 1, LLC, a wholly owned subsidiary of Charter, and Fusion Merger Sub 2, Inc., a wholly owned subsidiary of Fusion Merger Sub 1, LLC, were completed (the "Liberty Broadband Transaction").
Overview
With the closing of the Cox Transactions, we added approximately 5.4 million residential customers becoming the nation's leading Internet and video provider, passing more than 70 million homes and businesses across the United States. In September 2026, we began offering the full suite of Spectrum residential and small business products across the Cox Communications footprint.
The competitive environment continued to challenge our Internet customer growth in the third quarter of 2026 with legacy Charter losing 156,000 Internet customers. Legacy Charter mobile lines grew by 440,000, and video customer losses improved compared to the prior year period, reflecting improvements to our video product offering.
In November 2026, we announced a new operating model focused on returning to growth, principally by winning more Internet customers, and becoming a simpler and more efficient organization.
To return to growth, we are reformulating our consumer proposition and go-to-market approach to increase Internet connects through simpler, more transparent offers, modified sales channel capabilities and the layering of mobile and video into our Internet offerings. We also intend to reduce churn through reconfigured promotional and retail offers and a more disciplined focus on the drivers of customer service calls, including continued investment in technology. We seek to maintain or increase average revenue per customer at connect and over the course of the customer relationship while returning to customer growth.
To become more efficient, we are redesigning how we operate our business to reduce complexity and focusing resources on activities that contribute most directly to growth. In addition to the more than $1 billion of annualized run-rate operating
expense synergies we anticipate from the Cox Transactions, we are targeting an additional $2 billion of annualized run-rate operating expense savings over the next 18 months. We expect the savings to come primarily from eliminating projects that do not contribute to Internet growth, reducing management layers and obtaining better speed, quality and pricing from a more focused and narrowed set of vendors. We cannot provide assurance that we will achieve these synergies or savings in the amounts or timing we expect, or at all.
We currently offer Spectrum Internet speeds up to 1 Gbps across our entire footprint and multi-gigabit speeds in a portion of our footprint. Our network evolution initiative is designed to deliver symmetrical and multi-gigabit speeds across our entire footprint with convergence everywhere we operate. We spent $292 million and $1.1 billion on our subsidized rural construction initiative during the three and nine months ended September 30, 2026, respectively, and activated approximately 116,000 and 332,000 subsidized rural passings, respectively.
We realized revenue, Adjusted EBITDA and income (loss) from operations during the periods presented as follows (in millions; all percentages are calculated using whole numbers; minor differences may exist due to rounding):
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 % Change 2026 2025 % Change
Revenues $ 14,922 $ 13,672 9.1 % $ 42,045 $ 41,173 2.1 %
Adjusted EBITDA $ 5,923 $ 5,540 6.9 % $ 16,969 $ 16,946 0.1 %
Income (loss) from operations $ (3,539) $ 3,117 (213.5) % $ 2,707 $ 9,593 (71.8) %
Adjusted EBITDA is defined as net income (loss) attributable to CCO Holdings member plus net income attributable to noncontrolling interest, interest expense, net, income taxes, depreciation and amortization, impairment of franchises, stock compensation expense, other income (expenses), net and other operating (income) expenses, net, such as restructuring costs, special charges, merger and acquisition costs and (gain) loss on sale or retirement of assets. See "Use of Adjusted EBITDA and Free Cash Flow" for further information on Adjusted EBITDA and free cash flow.
Total revenues increased $1.3 billion and $872 million during the three and nine months ended September 30, 2026, respectively, compared to the corresponding periods in 2025 primarily due to the Cox Transactions which increased revenues by $1.4 billion. Excluding the Cox Transactions, total revenues decreased $118 million and $496 million during the three and nine months ended September 30, 2026, respectively, compared to the corresponding periods in 2025 primarily due to a higher seamless entertainment allocation and lower customer relationships, partly offset by mobile line growth.
Adjusted EBITDA increased $383 million and $23 million during the three and nine months ended September 30, 2026, respectively, compared to the corresponding periods in 2025 primarily due to the Cox Transactions. Excluding the Cox Transactions, Adjusted EBITDA decreased primarily due to lower legacy Charter revenue and higher transition expenses incurred as we integrate Cox Communications. Income (loss) from operations was further impacted by an impairment on franchises, higher depreciation and amortization and merger and acquisition costs incurred in connection with the closing of the Cox Transactions.
The following table summarizes our customer statistics for connectivity, Internet, mobile, video and voice as of September 30, 2026 and 2025 (in thousands except per customer data and footnotes).
Approximate as of
September 30,
2026 (a)
2025 (a)
Customer Relationships (b)
Residential 34,476 29,734
Small Business (c)
2,215 2,239
Total Customer Relationships 36,691 31,973
Monthly Residential Revenue per Residential Customer (d)
$ 117.12 $ 119.16
Monthly Small Business Revenue per Small Business Customer (c)(e)
$ 163.74 $ 161.97
Connectivity (f)
Residential 33,294 28,658
Small Business (c)
2,064 2,077
Total Connectivity Customers 35,358 30,735
Internet
Residential 32,289 27,760
Small Business (c)
2,025 2,039
Total Internet Customers 34,314 29,799
Mobile Lines (g)
Residential 12,992 10,964
Small Business (c)
460 374
Total Mobile Lines 13,452 11,338
Video (h)
Residential 13,298 12,023
Small Business (c)
503 538
Total Video Customers 13,801 12,561
Voice
Residential 4,952 4,967
Small Business (c)
1,191 1,219
Total Voice Customers 6,143 6,186
After giving effect to the Cox Transactions described above, residential customer statistics would have been the following as of September 30, 2025 (in thousands):
Customer Relationships (b)
35,419
Connectivity (f)
34,084
Internet 33,173
Mobile Lines (g)
11,282
Video (h)
13,519
Voice 5,730
(a)We calculate the aging of customer accounts based on the monthly billing cycle for each account in accordance with our collection policies. On that basis, as of September 30, 2026 and 2025, customers include approximately 101,800 and 87,100 customers, respectively, whose accounts were over 60 days past due, approximately 11,700 and 10,500 customers, respectively, whose accounts were over 90 days past due and approximately 17,700 and 13,200 customers, respectively,
whose accounts were over 120 days past due. Past due accounts as of September 30, 2025 are for legacy Charter only.
(b)Customer relationships include the number of customers that receive one or more levels of service, encompassing Internet, mobile, video and voice services, without regard to which service(s) such customers receive. Customers who reside in residential multiple dwelling units ("MDUs") and that are billed under bulk contracts are counted based on the number of billed units within each bulk MDU. Total customer relationships exclude legacy Charter mid-market & large business customer relationships and legacy Cox Communications business customers.
(c)Small business customer statistics reflect data for legacy Charter customers only.
(d)Monthly residential revenue per residential customer is calculated as legacy Charter total residential quarterly revenue divided by three divided by legacy Charter average residential customer relationships during the respective quarter.
(e)Monthly small business revenue per small business customer is calculated as total small business quarterly revenue divided by three divided by average small business customer relationships during the respective quarter.
(f)Connectivity customers represent all customers receiving our Internet and/or mobile connectivity services.
(g)Mobile lines include phones and tablets which require one of our standard rate plans (e.g., "Unlimited" or "By the Gig"). Mobile lines exclude wearables and other devices that do not require standard phone rate plans.
(h)Video customers only include customers that purchase traditional or streaming linear video packages and exclude customers that only purchase streaming applications.
Critical Accounting Policies and Estimates
For a discussion of our critical accounting policies and the means by which we develop estimates, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Annual Report on Form 10-K. There have been no material changes to the critical accounting policies and estimates described in our Form 10-K, except as set forth below.
Valuation and impairment of franchises and goodwill
During the third quarter of 2026, we determined that the sustained decline in Charter's stock price was a triggering event requiring an interim quantitative impairment analysis of our franchises and goodwill as of July 31, 2026. See Note 3 to the accompanying consolidated financial statements contained in "Item 1. Financial Statements" for more information.
Fair value was estimated using unobservable inputs that require significant judgment. The most significant are the projected enterprise cash flows, the portion of those cash flows attributable to franchises based upon customer growth and attrition, and discount rates. Projected cash flows reflect assumptions about customer growth and attrition, pricing, programming and other operating costs, and capital investment requirements and are generally consistent with market assumptions and analyst consensus. The discount rate is based on a market participant's weighted average cost of capital. The determination of fair value also required significant judgment regarding the fair value of property, plant and equipment and the associated contributory asset charges. Changes in these assumptions could materially impact the amount of excess earnings attributed to the franchises and the resulting estimate of fair value.
We tested legacy Charter's two franchise units of accounting and recorded a pre-tax non-cash franchise impairment charge of $6.3 billion related to one franchise unit of accounting. The franchise impairment reflects both the impact of updated financial projections with reduced estimated future cash flows reflecting lower estimates for future customer and revenue growth, given recent results and market perception of risk, and higher values attributable to the replacement cost of fixed assets given global market inflationary pressure for certain network components. Also, in connection with the quantitative analysis performed, we concluded that the fair value of the other franchise unit of accounting exceeded its carrying amount by approximately 8% and no impairment was recorded. The impairment analysis is sensitive to changes in discount rates. Holding all other assumptions constant, a 50-basis point increase in the discount rate would result in the fair value of the franchise unit that was not impaired approximating its carrying amount, while increasing the impairment charge recorded for the other franchise unit by approximately $1.9 billion.
In connection with the quantitative analysis performed on goodwill as of July 31, 2026, and after giving effect to the franchise impairment discussed above, we concluded that the fair value of our reporting unit substantially exceeded our carrying value and no impairment was recorded.
We considered Charter's market capitalization and other available market information when evaluating the reasonableness of our fair value conclusions. We may record additional impairments in future periods should estimated future cash flows decline, discount rates increase or Charter's stock price continues to decline, indicating fair values may have fallen below carrying
values. Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates, which could materially impact the determination of fair value or impairment, or both.
Business Combinations
We applied business combination accounting to the Cox Transactions, which closed on August 19, 2026. Due to the timing of the acquisition, the valuation of the assets acquired and liabilities assumed has not yet been finalized. The final amounts could differ materially from the preliminary estimates, and any adjustments would change depreciation and amortization expense in future periods. Any necessary adjustments from our preliminary estimates will be finalized within one year from the date of acquisition. Measurement period adjustments will be recorded in the period in which they are determined, as if they were completed at the acquisition date.
The most significant judgments are the fair values assigned to franchises and to customer relationships and the allocation between them, because franchises are not amortized while customer relationships are amortized over their estimated useful lives. Critical estimates used in valuing these assets include the amount and timing of expected future cash flows, the cash flows attributable to the franchises based upon customer growth and attrition rates, useful lives and discount rates. Critical estimates are also used in determining the fair value of property, plant and equipment including replacement cost estimates, asset economic life, as well as functional or economic obsolescence. We also estimated the fair value of the equity consideration issued, comprised of Charter Holdings common units measured by reference to the closing price of Charter Class A common stock on the acquisition date and Charter Holdings convertible preferred units measured using a binomial lattice model.
Because the franchises acquired in the Cox Transactions were recorded at fair value as of the acquisition date, their carrying values approximate fair value and would be exposed to impairment upon any subsequent decline in estimated fair value. See "Valuation and impairment of franchises and goodwill" above.
Results of Operations
The following table sets forth the consolidated statements of operations for the periods presented (dollars in millions):
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Revenues $ 14,922 $ 13,672 $ 42,045 $ 41,173
Costs and Expenses:
Operating costs and expenses (exclusive of items shown separately below)
9,176 8,283 25,594 24,757
Depreciation and amortization 2,614 2,153 7,007 6,495
Impairment of franchises 6,326 - 6,326 -
Other operating expenses, net 345 119 411 328
18,461 10,555 39,338 31,580
Income (loss) from operations (3,539) 3,117 2,707 9,593
Other Income (Expenses):
Interest expense, net (1,331) (1,259) (3,846) (3,744)
Other income (expenses), net 1,376 (131) 1,455 (330)
45 (1,390) (2,391) (4,074)
Income (loss) before income taxes (3,494) 1,727 316 5,519
Income tax expense (18) (15) (48) (39)
Consolidated net income (loss) (3,512) 1,712 268 5,480
Less: Net income attributable to noncontrolling interests (1) - (2) (1)
Net income (loss) attributable to CCO Holdings member $ (3,513) $ 1,712 $ 266 $ 5,479
Revenues. Total revenues increased $1.3 billion and $872 million during the three and nine months ended September 30, 2026, respectively, compared to the corresponding periods in 2025 due to the Cox Transactions which increased revenues by $1.4 billion. Excluding the Cox Transactions, total revenues decreased $118 million and $496 million during the three and nine months ended September 30, 2026, respectively, compared to the corresponding periods in 2025 primarily due to a higher seamless entertainment allocation and lower customer relationships, partly offset by mobile line growth.
Revenues by service offering were as follows (dollars in millions; all percentages are calculated using whole numbers; minor differences may exist due to rounding):
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 % Change 2026 2025 % Change
Internet $ 6,395 $ 5,971 7.1 % $ 18,023 $ 17,870 0.9 %
Mobile service 1,134 954 18.9 % 3,281 2,789 17.6 %
Connectivity 7,529 6,925 8.7 % 21,304 20,659 3.1 %
Video 3,292 3,389 (2.9) % 9,693 10,457 (7.3) %
Voice 340 332 2.6 % 1,009 1,034 (2.4) %
Residential revenue 11,161 10,646 4.8 % 32,006 32,150 (0.4) %
Legacy Charter small business 1,090 1,088 0.1 % 3,284 3,272 0.3 %
Legacy Charter mid-market & large business 762 747 2.1 % 2,272 2,221 2.3 %
Legacy Cox Communications business 397 - n/a 397 - n/a
Commercial revenue 2,249 1,835 22.6 % 5,953 5,493 8.4 %
Advertising sales 460 356 29.2 % 1,234 1,067 15.7 %
Other 1,052 835 26.0 % 2,852 2,463 15.8 %
$ 14,922 $ 13,672 9.1 % $ 42,045 $ 41,173 2.1 %
The increase in Internet revenues from our residential customers is attributable to the following (dollars in millions):
Three months ended
September 30, 2026
compared to
three months ended
September 30, 2025 		Nine months ended
September 30, 2026
compared to
nine months ended
September 30, 2025
Cox Transactions $ 602 $ 602
Decrease in average residential legacy Charter Internet customers (114) (305)
Decrease related to rate (64) (144)
$ 424 $ 153
Residential Internet customers increased by 4.5 million customers from September 30, 2025 to September 30, 2026. Excluding customers acquired in the Cox Transactions, residential Internet customers decreased by 553,000.
The increase in mobile service revenues from our residential customers is attributable to the following (dollars in millions):
Three months ended
September 30, 2026
compared to
three months ended
September 30, 2025 		Nine months ended
September 30, 2026
compared to
nine months ended
September 30, 2025
Cox Transactions $ 16 $ 16
Increase in average residential legacy Charter mobile lines 141 452
Increase related to rate 23 24
$ 180 $ 492
Residential mobile lines increased by approximately 2.0 million mobile lines from September 30, 2025 to September 30, 2026. Excluding customers acquired in the Cox Transactions, residential mobile lines increased by 1.6 million.
Video revenues consist primarily of revenues from video services provided to our residential customers, as well as franchise fees, equipment service fees and video installation revenue. The decrease in video revenues is attributable to the following (dollars in millions):
Three months ended
September 30, 2026
compared to
three months ended
September 30, 2025 		Nine months ended
September 30, 2026
compared to
nine months ended
September 30, 2025
Cox Transactions $ 257 $ 257
Increase in seamless entertainment allocation (178) (533)
Decrease related to rate and product mix changes (160) (387)
Decrease in average residential legacy Charter video customers (16) (101)
$ (97) $ (764)
Seamless entertainment allocation represents costs allocated to programmer streaming applications and netted within video revenue. The increase in seamless entertainment allocation is due to growth in seamless entertainment applications and higher activations. The decrease related to rate and product mix was primarily due to a more unfavorable bundled revenue allocation and higher mix of lower priced video packages within our video customer base, partly offset by promotional rate step-ups and video rate adjustments that pass-through programming rate increases. Residential video customers increased by 1.3 million from September 30, 2025 to September 30, 2026. Excluding customers acquired in the Cox Transactions, residential video customers decreased by 40,000.
The change in voice revenues from our residential customers is attributable to the following (dollars in millions):
Three months ended
September 30, 2026
compared to
three months ended
September 30, 2025 		Nine months ended
September 30, 2026
compared to
nine months ended
September 30, 2025
Cox Transactions $ 27 $ 27
Decrease in average residential legacy Charter voice customers (43) (137)
Increase related to rate adjustments 24 85
$ 8 $ (25)
Residential wireline voice customers decreased by 15,000 customers from September 30, 2025 to September 30, 2026. Excluding customers acquired in the Cox Transactions, residential wireline voice customers decreased by 650,000.
The increase in legacy Charter small business revenues is attributable to the following (dollars in millions):
Three months ended
September 30, 2026
compared to
three months ended
September 30, 2025 		Nine months ended
September 30, 2026
compared to
nine months ended
September 30, 2025
Increase related to rate and product mix changes $ 12 $ 37
Decrease in average small business customers (10) (25)
$ 2 $ 12
Small business customers decreased by 24,000 from September 30, 2025 to September 30, 2026.
Legacy Charter mid-market & large business revenues increased $15 million and $51 million during the three and nine months ended September 30, 2026, respectively, compared to the corresponding periods in 2025 primarily due to an increase in Internet primary service units. Mid-market & large business primary service units increased 14,000 from September 30, 2025 to September 30, 2026.
Cox Communications business revenues represent legacy Cox Communications commercial revenue.
Advertising sales revenues consist primarily of revenues from commercial advertising customers, programmers and other vendors, as well as local cable and advertising on regional sports and news channels. Advertising sales revenues increased $104 million and $167 million during the three and nine months ended September 30, 2026, respectively, as compared to the corresponding periods in 2025 primarily due to an increase in political and streaming advertising revenue, partly offset by a decrease in linear advertising revenue. The Cox Transactions increased advertising sales revenues by $28 million during the three and nine months ended September 30, 2026 as compared to the corresponding periods in 2025.
Other revenues consist of revenue from mobile and video device sales, processing fees, regional sports and news channels (excluding intercompany charges or advertising sales on those channels), subsidy revenue, home shopping, wire maintenance fees and other miscellaneous revenues. Other revenues increased $217 million and $389 million during the three and nine months ended September 30, 2026, respectively, compared to the corresponding periods in 2025 primarily due to higher mobile device sales, partly offset by a one-time $45 million benefit during the nine months ended September 30, 2025. The Cox Transactions increased other revenues by $41 million during the three and nine months ended September 30, 2026 as compared to the corresponding periods in 2025.
Operating costs and expenses. The increase in our operating costs and expenses, exclusive of items shown separately in the consolidated statements of operations, are attributable to the following (dollars in millions):
Three months ended
September 30, 2026
compared to
three months ended
September 30, 2025 		Nine months ended
September 30, 2026
compared to
nine months ended
September 30, 2025
Programming $ (55) $ (487)
Other costs of revenue 431 798
Field and technology operations 191 188
Customer operations 26 28
Marketing and residential sales 58 (3)
Transition expenses 72 161
Other 170 152
$ 893 $ 837
Programming costs were approximately $2.1 billion and $2.2 billion for the three months ended September 30, 2026 and 2025, representing 23% and 26% of total operating costs and expenses, respectively, and $6.3 billion and $6.7 billion for the nine months ended September 30, 2026 and 2025, representing 24% and 27% of total operating costs and expenses, respectively.
Programming costs consist primarily of costs paid to programmers for basic, premium, video on demand, and pay-per-view programming. Programming costs decreased primarily as a result of a $178 million and $533 million increase in costs allocated to seamless entertainment applications and netted within video revenue during the three and nine months ended September 30, 2026, respectively, compared to the corresponding periods in 2025 as well as fewer video customers and a higher mix of lower cost video packages within our video customer base, partly offset by the Cox Transactions and contractual rate adjustments, including renewals and increases in amounts paid for retransmission consent.
Other costs of revenue increased $431 million and $798 million during the three and nine months ended September 30, 2026, respectively, compared to the corresponding periods in 2025 primarily due to the Cox Transactions, higher mobile device sales and mobile service direct costs due to an increase in mobile lines as well as higher advertising sales costs given higher political revenue.
Field and technology operations increased $191 million and $188 million during the three and nine months ended September 30, 2026, respectively, compared to the corresponding periods in 2025 primarily due to the Cox Transactions.
Transition expenses represent incremental costs incurred to prepare for the integration of Cox Communications' operations and to bring systems and processes into a uniform operating structure.
Other expense increased $170 million and $152 million during the three and nine months ended September 30, 2026, respectively, compared to the corresponding periods in 2025 primarily due to the Cox Transactions.
Depreciation and amortization. Depreciation and amortization expense increased $461 million and $512 million during the three and nine months ended September 30, 2026, respectively, compared to the corresponding periods in 2025 primarily due to additional depreciation and amortization related to the Cox Transactions, inclusive of the incremental amounts as a result of the higher fair values recorded in business combination accounting, as well as an increase in depreciation as a result of more recent capital expenditures, partly offset by certain assets becoming fully depreciated.
Impairment of franchises. Impairment of franchises of $6.3 billion recognized during the three and nine months ended September 30, 2026 represents the non-cash impairment of our indefinite-lived franchise intangible assets. See Note 3 to the accompanying consolidated financial statements contained in "Item 1. Financial Statements" for more information.
Other operating expenses, net. The change in other operating expenses, net is attributable to the following (dollars in millions):
Three months ended
September 30, 2026
compared to
three months ended
September 30, 2025 		Nine months ended
September 30, 2026
compared to
nine months ended
September 30, 2025
Restructuring costs $ 62 $ 10
Special charges, net 39 72
Merger and acquisition costs 137 116
Loss on sale or retirement of assets, net (12) (115)
$ 226 $ 83
See Note 9 to the accompanying consolidated financial statements contained in "Item 1. Financial Statements" for more information.
Interest expense, net. Net interest expense increased by $72 million and $102 million for the three and nine months ended September 30, 2026, respectively, compared to the corresponding periods in 2025 primarily due to an increase of $39 million of interest expense associated with debt incurred to fund the Cox Transactions and $71 million associated with debt assumed in the Cox Transactions, partly offset by a $52 million gain on treasury rate locks entered into to hedge interest rate risk ahead of the financing to fund the Cox Transactions.
Other income (expenses), net. The change in other income (expenses), net is attributable to the following (dollars in millions):
Three months ended
September 30, 2026
compared to
three months ended
September 30, 2025 		Nine months ended
September 30, 2026
compared to
nine months ended
September 30, 2025
Loss on equity investments, net $ 5 $ 7
Gain (loss) on financial instruments, net (see Note 7) 88 125
Gain (loss) on extinguishment of debt, net (see Note 5) 1,419 1,658
Net periodic pension benefit (5) (5)
$ 1,507 $ 1,785
See Note 9 and the Notes referenced above to the accompanying consolidated financial statements contained in "Item 1. Financial Statements" for more information.
Income tax expense. We recognized income tax expense of $18 million and $48 million for the three and nine months ended September 30, 2026, respectively, and $15 million and $39 million for the three and nine months ended September 30, 2025, respectively.
Net income attributable to noncontrolling interest. Net income attributable to noncontrolling interest relates to our third-party interest in CV of Viera, LLP, a consolidated joint venture in a small cable system in Florida.
Net income (loss) attributable to CCO Holdings member. Net loss attributable to CCO Holdings member was $3.5 billion during the three months ended September 30, 2026 and net income attributable to CCO Holdings member was $266 million during the nine months ended September 30, 2026 and $1.7 billion and $5.5 billion during the three and nine months ended September 30, 2025, respectively, primarily as a result of the factors described above.
Use of Adjusted EBITDA and Free Cash Flow
We use certain measures that are not defined by U.S. generally accepted accounting principles ("GAAP") to evaluate various aspects of our business. Adjusted EBITDA and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, net income (loss) attributable to CCO Holdings member and net cash flows from operating activities reported in accordance with GAAP. These terms, as defined by us, may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA and free cash flow are reconciled to net income (loss) attributable to CCO Holdings member and net cash flows from operating activities, respectively, below.
Adjusted EBITDA eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of our businesses as well as other non-cash or special items, and is unaffected by our capital structure or investment activities. However, this measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and our cash cost of financing. These costs are evaluated through other financial measures.
Free cash flow is defined as net cash flows from operating activities, less capital expenditures and changes in accrued expenses related to capital expenditures.
Management and Charter's board of directors use Adjusted EBITDA and free cash flow to assess our performance and our ability to service our debt, fund operations and make additional investments with internally generated funds. In addition, Adjusted EBITDA generally correlates to the leverage ratio calculation under our credit facilities or outstanding notes to determine compliance with the covenants contained in the facilities and notes (all such documents have been previously filed with the Securities and Exchange Commission (the "SEC")). For the purpose of calculating compliance with leverage covenants, we use Adjusted EBITDA, as presented, excluding certain expenses paid by our operating subsidiaries to other Charter entities. Our debt covenants refer to these expenses as management fees which were $377 million and $1.1 billion for the three and nine months ended September 30, 2026, respectively, and $350 million and $1.1 billion for the three and nine months ended September 30, 2025, respectively.
A reconciliation of Adjusted EBITDA and free cash flow to net income (loss) attributable to CCO Holdings member and net cash flows from operating activities, respectively, is as follows (dollars in millions):
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Net income (loss) attributable to CCO Holdings member $ (3,513) $ 1,712 $ 266 $ 5,479
Plus: Net income attributable to noncontrolling interest 1 - 2 1
Interest expense, net 1,331 1,259 3,846 3,744
Income tax expense 18 15 48 39
Depreciation and amortization 2,614 2,153 7,007 6,495
Impairment of franchises 6,326 - 6,326 -
(Gain) loss on extinguishment of debt (1,391) 28 (1,630) 28
Stock compensation expense 177 151 518 530
Other, net 360 222 586 630
Adjusted EBITDA $ 5,923 $ 5,540 $ 16,969 $ 16,946
Net cash flows from operating activities $ 4,539 $ 4,483 $ 12,906 $ 12,958
Less: Purchases of property, plant and equipment (3,013) (3,051) (8,726) (8,324)
Change in accrued expenses related to capital expenditures (326) 192 (488) 239
Free cash flow $ 1,200 $ 1,624 $ 3,692 $ 4,873
Liquidity and Capital Resources
Recent Events
During the nine months ended September 30, 2026, we repurchased $1.2 billion in aggregate principal amount of various series of notes under an open market repurchase program for $1.0 billion in cash.
In August 2026, Charter Communications Operating, LLC ("Charter Operating") and Charter Communications Operating Capital Corp. jointly issued $1.75 billion of 6.050% senior secured notes due February 2032 at a price of 99.839% of the aggregate principal amount, $1.0 billion of 6.600% senior secured notes due February 2034 at a price of 99.896% of the aggregate principal amount, $1.0 billion of 6.950% senior secured notes due August 2036 at a price of 99.937% of the aggregate principal amount and $1.0 billion of 7.850% senior secured notes due August 2056 at a price of 99.921% of the aggregate principal amount. The net proceeds were used to pay the cash consideration for the Cox Transactions and for general corporate purposes, including to repay certain indebtedness and to pay related fees and expenses.
In August 2026, Charter Operating, Charter Communications Operating Capital Corp. and Time Warner Cable, LLC ("TWC, LLC") exchanged approximately $5.5 billion in aggregate principal amount of various series of senior secured notes for a combination of $622 million in cash and approximately $1.7 billion of 7.087% senior secured notes due September 2038 issued at par and approximately $1.7 billion of 7.337% senior secured notes due September 2041 issued at par.
In September 2026, $1.0 billion of Cox Communications debt was redeemed at maturity.
Overview
We have significant amounts of debt and require significant cash to fund principal and interest payments on our debt. The principal amount of our debt as of September 30, 2026 was $108.6 billion, consisting of $13.7 billion of credit facility debt, $68.2 billion of investment grade senior secured notes and $26.7 billion of high-yield senior unsecured notes. Our split credit rating allows us to access both the investment grade debt and the high yield debt markets.
Our projected cash needs and projected sources of liquidity depend upon, among other things, our actual results, and the timing and amount of our expenditures. Free cash flow was $1.2 billion and $3.7 billion for the three and nine months ended September 30, 2026, respectively, and $1.6 billion and $4.9 billion for the three and nine months ended September 30, 2025,
respectively. See the table below for factors impacting free cash flow during the three and nine months ended September 30, 2026 compared to the corresponding prior periods. As of September 30, 2026, the amount available under our credit facilities was approximately $2.4 billion and cash on hand was approximately $338 million. We expect to utilize free cash flow, cash on hand and availability under our credit facilities as well as future refinancing transactions to further extend the maturities of our obligations. The timing and terms of any refinancing transactions will be subject to market conditions among other considerations. Additionally, we may, from time to time, and depending on market conditions and other factors, use cash on hand and the proceeds from securities offerings or other borrowings to retire our debt through open market purchases, privately negotiated purchases, tender and exchange offers or redemption provisions. We believe we have sufficient liquidity from cash on hand, free cash flow and Charter Operating's revolving credit facility as well as access to the capital markets to fund our projected cash needs.
We continue to evaluate the deployment of our cash on hand and anticipated future free cash flow, including investing in our business growth and other strategic opportunities, including expanding the capacity of our network, the expansion of our network through our rural broadband construction initiative, the build-out and deployment of our CBRS spectrum, and mergers and acquisitions as well as distributions to parent companies for stock repurchases, dividends and debt reduction. Charter's leverage ratio of net debt to the last twelve months Adjusted EBITDA, when excluding transition expenses, was 3.93 times as of September 30, 2026. Charter plans to reduce its leverage ratio to 3.5 times net debt to Adjusted EBITDA within three years post-closing of the Cox and Liberty Broadband transactions. We currently expect to decrease the total amount of our indebtedness to achieve Charter's target leverage.
Excluding purchases from Liberty Broadband discussed below, during the nine months ended September 30, 2026, Charter purchased in the public market approximately 5.5 million shares of Charter Class A common stock for approximately $1.2 billion, and during the three and nine months ended September 30, 2025, Charter purchased in the public market approximately 6.4 million and 10.6 million shares of Charter Class A common stock, respectively, for approximately $1.8 billion and $3.4 billion, respectively. Since the beginning of its buyback program in September 2016 through September 30, 2026, Charter has purchased approximately 188.1 million shares of Class A common stock and Charter Holdings common units for approximately $80.6 billion, including purchases from Liberty Broadband and A/N discussed below.
Prior to the consummation of the Liberty Broadband Transaction, during the three and nine months ended September 30, 2026, Charter purchased from Liberty Broadband 0.1 million and 2.9 million shares of Charter Class A common stock, respectively, for approximately $19 million and $614 million, respectively, and during the three and nine months ended September 30, 2025, Charter purchased from Liberty Broadband 0.9 million and 2.5 million shares of Charter Class A common stock, respectively, for approximately $300 million and $900 million, respectively.
In connection with the Cox Transactions, on August 19, 2026, Charter, Charter Holdings and A/N entered into a letter agreement (the "A/N Letter Agreement") that requires A/N to sell to Charter or to Charter Holdings, on a monthly basis, a number of shares of Charter Class A common stock or Charter Holdings common units that represents a pro rata participation by A/N and its affiliates in any repurchases of shares of Charter Class A common stock from persons other than A/N or its affiliates or Cox Enterprises or its affiliates effected by Charter during the immediately preceding calendar month, at a purchase price equal to the average price paid by Charter for the shares repurchased from persons other than A/N or its affiliates or Cox Enterprises or its affiliates during such immediately preceding calendar month. The A/N Letter Agreement includes A/N's election to continue to suspend its participation in repurchases under the A/N Letter Agreement until the time such suspension is revoked by A/N. During the three and nine months ended September 30, 2025, Charter Holdings purchased from A/N 0.3 million and 1.0 million Charter Holdings common units for approximately $121 million and $373 million, respectively. Charter Holdings did not purchase any Charter Holdings common units from A/N during the three and nine months ended September 30, 2026.
In connection with the Cox Transactions, on August 19, 2026, Charter, Charter Holdings and Cox Enterprises entered into a letter agreement, (the "Cox Letter Agreement") that requires Cox Enterprises to sell to Charter or to Charter Holdings, on a monthly basis, a number of shares of Charter Class A common stock or Charter Holdings common units that represents a pro rata participation by Cox Enterprises and its affiliates in any repurchases of shares of Charter Class A common stock from persons other than Cox Enterprises or its affiliates or A/N or its affiliates effected by Charter during the immediately preceding calendar month, at a purchase price equal to the average price paid by Charter for the shares repurchased from persons other than Cox Enterprises or its affiliates or A/N or its affiliates during such immediately preceding calendar month. On September 28, 2026, Charter received a notice from Cox Enterprises pursuant to the Cox Letter Agreement, whereby Cox Enterprises notified Charter that they have elected to suspend their participation in repurchases until the time such suspension is revoked by Cox Enterprises. Charter Holdings did not purchase any Charter Holdings common units from Cox Enterprises during the three and nine months ended September 30, 2026.
Under the Second Amended and Restated Limited Liability Company Agreement of Charter Communications Holdings, LLC, dated as of August 19, 2026, by and among Charter, Cox Equity Holdings, A/N and the other parties thereto (the "LLC Agreement"), in certain circumstances including where A/N or Cox Equity Holdings elects not to participate in redemptions by Charter Holdings because such participation would cause A/N's equity interest in Charter to be less than 9.2% or Cox Equity Holdings' equity interest in Charter to be less than 20.2%, A/N or Cox Equity Holdings may, respectively and subject to certain conditions, elect to receive a tax loan from Charter Holdings on the terms set forth in the LLC Agreement.
As of September 30, 2026, Charter had remaining board authority to purchase an additional $836 million of Charter's Class A common stock and/or Charter Holdings common units. Although Charter expects to continue to buy back its common stock consistent with its leverage target range, Charter is not obligated to acquire any particular amount of common stock, and the timing of any purchases that may occur cannot be predicted and will largely depend on market conditions and other potential uses of capital. Purchases may include open market purchases, tender offers or negotiated transactions. To the extent such purchases occur, CCO Holdings and its subsidiaries are the primary source for funding such purchases through distributions to their parent companies.
As possible acquisitions, swaps or dispositions arise, we actively review them against our objectives including, among other considerations, improving the operational efficiency, geographic clustering of assets, product development or technology capabilities of our business and achieving appropriate return targets, and we may participate to the extent we believe these possibilities present attractive opportunities. However, there can be no assurance that we will actually complete any acquisitions, dispositions or system swaps, or that any such transactions will be material to our operations or results.
Free Cash Flow
Free cash flow decreased $424 million and $1.2 billion during the three and nine months ended September 30, 2026, respectively, compared to the corresponding prior periods in 2025 due to the following (dollars in millions):
Three months ended
September 30, 2026
compared to
three months ended
September 30, 2025 		Nine months ended
September 30, 2026
compared to
nine months ended
September 30, 2025
Increase in Adjusted EBITDA $ 383 $ 23
Decrease (increase) in capital expenditures 38 (402)
Increase in cash paid for interest, net (126) (191)
Changes in working capital, excluding mobile devices (373) (268)
Changes in working capital, mobile devices (107) (135)
Other, net (239) (208)
$ (424) $ (1,181)
Financial Information about Guarantors, Issuers of Guaranteed Securities, Affiliates Whose Securities Collateralize a Registrant's Securities and Consolidated Subsidiaries
Each of CCO Holdings, Charter Operating, Cox Communications, Time Warner Cable, LLC and Time Warner Cable Enterprises LLC (collectively, the "Issuers") and substantially all of Charter Operating's direct and indirect subsidiaries (the "Obligor Subsidiaries" and together with the Issuers, collectively, the "Obligor Group" and each an "Obligor") jointly, severally, fully and unconditionally guarantee the outstanding debt securities of the respective Issuers (other than the CCO Holdings unsecured notes) and Charter Operating's credit facilities on a senior basis (collectively, the "Guaranteed and Secured Debt"). Such guarantees are pari passu in right of payment with all senior indebtedness of the guarantors and senior in right of payment to subordinated obligations of the guarantors. Each guarantee will be limited to the maximum amount that can be guaranteed by the relevant guarantor without rendering the relevant guarantee, as it relates to that guarantor, voidable or otherwise ineffective or limited under applicable law, and enforcement of each guarantee would be subject to certain generally available defenses. The Guaranteed and Secured Debt is structurally subordinated to the creditors (including trade creditors) and preference shareholders (if any) of Charter Operating's non-guarantor subsidiaries.
The Guaranteed and Secured Debt and the subsidiary guarantees thereof are also secured by (i) a lien on substantially all of the assets of Charter Operating and the Obligor Subsidiaries, to the extent such lien can be perfected under the Uniform
Commercial Code by the filing of a financing statement, and (ii) a pledge of substantially all of the equity interests of subsidiaries owned by Charter Operating or the Obligor Subsidiaries (the "Pledged Equity Interests"), as well as intercompany obligations owing to it by any of such entities ((i) and (ii) collectively, the "Collateral"). In addition, payments of a mortgage note, currently outstanding for approximately $251 million, incurred by a single-asset special purpose entity to finance construction of the first building of the Charter headquarters in Stamford, Connecticut are guaranteed by the Obligor Group and rank equally with the liens on the Collateral securing the Guaranteed and Secured Debt. No assets of any of Charter Operating's non-guarantor subsidiaries (including any capital stock owned by any such subsidiary) will constitute Collateral. The subsidiary guarantees are effectively senior to all unsecured debt or debt secured by junior liens of the subsidiary guarantors, in each case to the extent of the value of the collateral securing the guarantee obligations of the subsidiary guarantors. Upon the occurrence and during the continuance of an event of default under the Guaranteed and Secured Debt, subject to the terms of an intercreditor agreement, the security documents governing the Guaranteed and Secured Debt provide for (among other available remedies) the foreclosure upon and sale of the Collateral by the collateral agent(s) of the respective Guaranteed and Secured Debt and the distribution of the net proceeds of any such sale to the holders and/or the lenders of the Guaranteed and Secured Debt on a pro rata basis, subject to any prior liens on the Collateral. We believe there is no separate trading market for the Pledged Equity Interests.
Certain Charter Operating subsidiaries that are regulated entities are only designated as guarantor subsidiaries, and certain related assets (including the capital stock of such regulated entities) are only required to be pledged as Collateral, upon approval by regulators. The guaranteed obligations and collateral of an Obligor Subsidiary (including Pledged Equity Interests) may be released under certain circumstances permitted under the documentation governing the Guaranteed and Secured Debt, including if an Obligor Subsidiary no longer qualifies as a "Subsidiary" of Charter Operating under transactions not prohibited by the Charter Operating credit agreement.
Our bankruptcy remote special purpose vehicle and consolidated subsidiary, CCO EIP Financing, LLC, (the "SPV Borrower") is the borrower of a senior secured revolving credit facility to finance the purchase of equipment installment plan receivables ("EIP Receivables") with a number of financial institutions (the "EIP Financing Facility"). Borrowings under the EIP Financing Facility are secured by the EIP Receivables transferred to the SPV Borrower, future collections on such EIP Receivables, and related assets consisting primarily of restricted cash. We and our other subsidiaries do not guarantee any principal or interest payable by SPV Borrower under the EIP Financing Facility and SPV Borrower is not a guarantor of the Guaranteed and Secured Debt. As of September 30, 2026, the carrying value of the EIP Financing Facility was $1.7 billion and is reflected on our consolidated balance sheets. As of September 30, 2026, pledged EIP Receivables with an unpaid principal balance of $2.4 billion, included in accounts receivable, net and other noncurrent assets, and restricted cash of $43 million, included in prepaid expenses and other current assets, are held by the SPV Borrower and reflected on our consolidated balance sheets.
See Note 9 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2025 for further details about the terms, conditions and other factors that may affect payments to holders and the collateral arrangements of the Guaranteed and Secured Debt.
Because the assets, liabilities and results of operations of the combined Obligor Group are not materially different than corresponding amounts presented in the consolidated financial statements of CCO Holdings, summarized financial information of the Obligor Group have been omitted pursuant to SEC Regulation S-X Rule 13-01, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered and S-X Rule 13-02, Affiliates Whose Securities Collateralize Securities Registered Or Being Registered.
Limitations on Distributions
Distributions by us and our subsidiaries to a parent company for payment of principal on parent company notes are restricted under CCO Holdings indentures governing CCO Holdings' indebtedness, unless there is no default under the applicable indenture, and unless CCO Holdings' leverage ratio test is met at the time of such distribution. As of September 30, 2026, there was no default under any of these indentures, and CCO Holdings met its leverage ratio test based on September 30, 2026 financial results. There can be no assurance that CCO Holdings will satisfy its leverage ratio test at the time of the contemplated distribution.
In addition to the limitation on distributions under the various indentures, distributions by our subsidiaries may be limited by applicable law, including the Delaware Limited Liability Company Act, under which our subsidiaries may only make distributions if they have "surplus" as defined in the act.
Historical Operating, Investing, and Financing Activities
Cash and Cash Equivalents. We held $338 million and $218 million in cash and cash equivalents as of September 30, 2026 and December 31, 2025, respectively. In addition, we held $43 million and $121 million in restricted cash included in prepaid and other current assets in our consolidated balance sheets as of September 30, 2026 and December 31, 2025, respectively.
Operating Activities. Net cash provided by operating activities decreased $52 million during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 primarily due to an increase in cash paid for interest and payments for merger and acquisition costs.
Investing Activities. Net cash used in investing activities was $9.3 billion and $8.3 billion for the nine months ended September 30, 2026 and 2025, respectively. The increase in cash used was primarily due to an increase in capital expenditures and changes in accrued expenses related to capital expenditures.
Financing Activities. Net cash used in financing activities decreased $1.1 billion during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 primarily due to the issuance of $4.75 billion of senior secured notes to primarily finance the Cox Transactions, partially offset by the debt exchange transaction and an increase in distributions to parent companies.
Capital Expenditures
We have significant ongoing capital expenditure requirements. Capital expenditures were $3.0 billion and $8.7 billion for the three and nine months ended September 30, 2026, respectively, and $3.1 billion and $8.3 billion for the three and nine months ended September 30, 2025, respectively. The increase in capital expenditures during the nine months ended September 30, 2026 compared to the corresponding period in 2025 was primarily driven by higher spend on network evolution and an increase in customer premise equipment and support capital, partly offset by a decrease in line extensions. See the table below for more details.
Our capital expenditures are funded primarily from cash flows from operating activities and borrowings on our credit facility. In addition, our accrued expenses related to capital expenditures decreased by $488 million and increased by $239 million for the nine months ended September 30, 2026 and 2025, respectively.
The following tables present our major capital expenditures categories in accordance with National Cable and Telecommunications Association ("NCTA") disclosure guidelines for the three and nine months ended September 30, 2026 and
2025. These disclosure guidelines are not required disclosures under GAAP, nor do they impact our accounting for capital expenditures under GAAP (dollars in millions):
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Customer premise equipment (a)
$ 670 $ 656 $ 1,992 $ 1,722
Scalable infrastructure (b)
341 425 987 1,089
Upgrade/rebuild (c)
741 484 2,073 1,336
Support capital (d)
535 449 1,406 1,234
Capital expenditures, excluding line extensions 2,287 2,014 6,458 5,381
Subsidized rural construction line extensions 292 580 1,108 1,590
Other line extensions 434 457 1,160 1,353
Total line extensions (e)
726 1,037 2,268 2,943
Total capital expenditures $ 3,013 $ 3,051 $ 8,726 $ 8,324
Of which:
Commercial services $ 376 $ 336 $ 955 $ 933
Subsidized rural construction initiative (f)
$ 292 $ 582 $ 1,110 $ 1,595
Mobile $ 73 $ 77 $ 202 $ 189
Transition (g)
$ 33 $ - $ 70 $ -
(a)Customer premise equipment includes equipment and devices located at the customer's premise used to deliver our Internet, video and voice services (e.g., modems, routers and set-top boxes), as well as installation costs.
(b)Scalable infrastructure includes costs, not related to customer premise equipment or our network, to secure growth of new customers or provide service enhancements (e.g., headend equipment).
(c)Upgrade/rebuild includes costs to modify or replace existing fiber/coaxial cable networks, including our network evolution initiative.
(d)Support capital includes costs associated with the replacement or enhancement of non-network assets (e.g., back-office systems, non-network equipment, land and buildings, vehicles, tools and test equipment).
(e)Line extensions include network costs associated with entering new service areas (e.g., fiber/coaxial cable, amplifiers, electronic equipment, make-ready and design engineering).
(f)The subsidized rural construction initiative subcategory includes projects for which we are receiving subsidies from federal, state and local governments, excluding customer premise equipment and installation.
(g)Transition represents incremental capital costs incurred to prepare for the integration of Cox Communications' operations and to bring systems and processes into a uniform operating structure.
Recently Issued Accounting Standards
See Note 19 to the Annual Report on Form 10-K for the year ended December 31, 2025 for a discussion of recently issued accounting standards. There have been no material changes from the recently issued accounting standards described in our Form 10-K.
CCO Holdings LLC published this content on November 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 06, 2026 at 12:09 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]