Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

​

We are one of the nation's leading broadband providers offering an expansive portfolio of advanced services, including high-speed data ("HSD"), cable television ("Video"), and digital telephony ("Telephony") services to residential customers and offer a full range of products and services to business customers. Our services are delivered across 18 markets via our efficient, advanced hybrid fiber-coax ("HFC") network. Our footprint covers certain suburban areas within the states of Alabama, Florida, Georgia, Michigan, South Carolina and Tennessee. At September 30, 2025, our broadband networks passed 2.0 million homes and businesses and served approximately 464,500 customers.

​

Our core strategy is to provide outstanding service at affordable prices. We execute this strategy by managing our operations to focus on the customer. We believe that the customer experience should be reliable, easy and pleasantly surprising, every time. To achieve this customer experience, we operate one of the most technically advanced and high-performing networks in the industry.

​

We operate under a broadband first strategy. Our advanced network offers HSD speeds up to 1.2 GIG (1200 Mbps) in approximately 99% of our footprint and HSD speeds up to 5 GIG (5000 Mbps) in our greenfield expansion markets. Led by our robust HSD offering, our products are available either as an individual service or a bundle to residential and business service customers. Based on our per subscriber economics, we believe that HSD represents the greatest opportunity to enhance profitability across our residential and business markets.

​

We continue to experience strong demand for our HSD service. For the three and nine months ended September 30, 2025, the average percentage of HSD only new connections was approximately 95%, a 1% increase when compared to the corresponding periods in 2024. There was an increase in customers purchasing higher speeds with approximately 77% of HSD only new connections purchasing 500MB or higher speeds during the three and nine months ended September 30, 2025, representing an increase of approximately 6% when compared to the corresponding periods in 2024.

​

WOW is continuing to focus on its market expansion strategy, which includes edge-outs and greenfield expansion, by building out its network in locations adjacent and nonadjacent to its existing network and bringing its state-of-the-art all IP fiber technology and award-winning customer service to those markets.

​

Recent Developments

​

Merger Agreement

​

On August 11, 2025, we entered into an Agreement and Plan of Merger (the "Merger Agreement") with Bandit Parent LP, a Delaware limited partnership ("Parent") and Bandit Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), pursuant to which, subject to the terms and conditions thereof, Merger Sub will merge with and into the Company (the "Merger") with the Company continuing as the surviving corporation. Parent and Merger Sub are affiliates of DigitalBridge and Crestview Partners, L.P. ("Crestview"). Crestview is currently the beneficial owner of approximately 37% of the Company's outstanding shares of common stock. Subject to the terms and conditions set forth in the Merger Agreement, upon the consummation of the Merger, each share of the Company's common stock, par value $0.01 per share (other than shares of the Company's common stock (i) held directly or indirectly by Parent, Merger Sub or any subsidiary of the Company, (ii) held by the Company as treasury shares, (iii) held by any person who properly exercises appraisal rights under Delaware law or (iv) subject to the Rollover Agreement described below) will be converted into the right to receive an amount in cash equal to $5.20 per share, without interest, subject to any withholding of taxes required by applicable law.

​

Certain stockholders of the Company affiliated with Crestview have entered into a Rollover, Voting and Support Agreement (the "Rollover Agreement") with the Company and Parent pursuant to which such stockholders have agreed to contribute their shares of Company common stock to Parent or an affiliate of Parent in exchange for equity interests of Parent or an affiliate of Parent, on the terms and subject to the conditions set forth in such agreement. The stockholders party to the Rollover Agreement have also agreed to vote their shares of Company common stock, representing approximately 37% of the outstanding shares of Company common stock, in favor of the adoption of the Merger Agreement.

​

The Merger, if completed, will result in WideOpenWest becoming a private company and the shares of Company common stock being de-listed from the New York Stock Exchange and de-registered under the Securities Exchange Act of 1934, as amended. The Merger is expected to close by the end of the year or in the first quarter of 2026.

​

The closing of the Merger is subject to various conditions, including the adoption of the Merger Agreement by holders of a majority of the outstanding shares of Company common stock and approval by the Federal Communications Commission. In addition, if the Merger Agreement is terminated under specified circumstances, the Company is required to pay Parent a termination fee of $15.8 million in cash, or Parent is required to pay the Company a termination fee of $31.6 million in cash.

​

Key Transactions Impacting Operating Results and Financial Condition

​

Revolver Extension

​

We entered into an amendment to the Revolving Credit Facility (the "RCF") under the Super-Priority Credit Agreement. The amendment extends the maturity date of the RCF to June 30, 2027; provided that, from and after (and contingent upon) the closing of the Merger Agreement, the maturity date will be September 11, 2028. Additionally, the amendment (i) amends the interest rate applicable to outstanding amounts under the RCF to a per annum rate of SOFR plus 6.00%, subject to a series of step-downs contingent upon injection of incremental equity following the closing of the Merger Agreement, and (ii) provides for certain adjustments to the maximum secured net leverage ratio covenant in future periods.

​

Critical Accounting Estimates

​

For a discussion of our critical accounting estimates and the means by which we develop estimates refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Annual Report on Form 10-K. There have been no material changes from the critical estimates described in our Form 10-K.

​

Homes Passed and Subscribers

We report homes passed as the number of serviceable addresses, such as single residence homes, apartments and condominium units, and businesses passed by our broadband network and listed in our database. We report total subscribers as the number of subscribers who receive at least one of our HSD, Video or Telephony services, without regard to which or how many services they subscribe. We define each of the individual HSD subscribers, Video subscribers and Telephony subscribers as a revenue generating unit ("RGU"). The following table summarizes homes passed, total subscribers and total RGUs for our services as of each respective date and for comparability purposes, presents subscribers associated with the Company's operations as of each specified date:

​

The following table displays the homes passed and subscribers related to the Company's market expansion activities, which includes edge-outs and greenfield expansion:

​

While we take appropriate steps to ensure subscriber information is presented on a consistent and accurate basis at any given balance sheet date, we periodically review our policies in light of the variability we may encounter across our different markets due to the nature and pricing of products, services, and billing systems. Accordingly, we may from time to time make appropriate adjustments to our subscriber information based on such reviews.

Financial Statement Presentation

Revenue

Our operating revenue is primarily derived from monthly recurring charges for HSD, Video, Telephony and other business services to residential and business customers, in addition to other revenues.

Revenues attributable to monthly subscription fees charged to customers for our HSD, Video and Telephony services provided by our broadband networks were 92% of total revenue for the nine months ended September 30, 2025 and 2024. The remaining percentage of total revenue represents non-subscription revenue primarily from other business services, paper statement fees, late fees, line assurance warranty services and advertising placement.

Costs and Expenses

Our expenses primarily consist of operating, selling, general and administrative expenses, depreciation and amortization expense, and interest expense.

​

Operating expenses primarily include programming costs, data costs, transport costs and network access fees related to our HSD, Video and Telephony services, hardware/software expenses, network operations and maintenance services, customer service and call center expenses, bad debt, billing and collection expenses and franchise and other regulatory fees.

​

Selling, general and administrative expenses primarily include salaries and benefits of corporate and field management, sales and marketing personnel, human resources and related administrative costs.

​

Depreciation and amortization includes depreciation of our network infrastructure, including associated equipment, hardware and software, buildings and leasehold improvements, and finance lease obligations. Amortization is recognized on other intangible assets with definite lives, primarily related to acquisitions. Depreciation and amortization expense is presented separately from operating and selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

​

We control our costs of operations by maintaining strict controls on expenditures. More specifically, we are focused on managing our cost structure by improving workforce productivity, increasing the effectiveness of our purchasing activities and maintaining discipline in customer acquisition. We expect programming expenses to continue to increase per Video subscriber due to a variety of factors, including increased demands by owners of some broadcast stations for carriage of other services or payments to those broadcasters for retransmission consent and annual increases imposed by programmers with additional selling power as a result of media consolidation. We have not been able to fully pass these increases on to our customers without the loss of customers, nor do we expect to be able to do so in the future.

​

Results of Operations

​

The following table summarizes our results of operations for the periods presented:

​

Revenue

​

Total revenue for three and nine months ended September 30, 2025 decreased $14.0 million and $40.1 million, or 9% and 8%, respectively, as compared to the corresponding periods in 2024 as follows:

​

Subscription Revenue

​

Total subscription revenue decreased $13.0 million, or 9%, and $37.1 million, or 8%, during the three and nine months ended September 30, 2025, respectively, as compared to the corresponding periods in 2024. The decreases were primarily driven by a $10.6 million and $32.9 million shift in service offering mix, respectively, as we experienced a reduction across all RGUs, and a $7.3 million and $22.5 million decrease in volume across all services. These decreases were partially offset by a $4.9 million and $18.3 million increase in average revenue per unit ("ARPU"), respectively, due to rate increases issued in the first and second quarters of 2025 offset by one. ARPU is calculated as subscription revenue for each of the HSD, Video and Telephony services divided by the average total RGUs for each service category for the respective period.

​

Other Business Services

Other business services revenue increased $0.4 million, or 9%, for the three months ended September 30, 2025 and decreased $0.1 million, or 1%, during the nine months ended September 30, 2025, as compared to the corresponding periods in 2024. For the three months ended September 30, 2025, the increase is primarily due to increases in wholesale revenue. For the nine months ended September 30, 2025, the decrease is primarily due to decreases in data center revenue partially offset by increases in wholesale revenue.

Other Revenue

Other revenue decreased $1.4 million, or 19%, and $2.9 million, or 13%, during the three and nine months ended September 30, 2025, as compared to the corresponding period in 2024. For the three and nine months ended September 30, 2025, the decrease is primarily due to decreases in paper statement revenue and advertising.

​

Operating expenses (excluding depreciation and amortization)

Operating expenses (excluding depreciation and amortization) decreased $8.7 million, or 14%, and $26.6 million, or 14%, during the three and nine months ended September 30, 2025, respectively, as compared to the corresponding periods in 2024. For the three and nine months ended September 30, 2025, the decreases are primarily driven by reduction in direct operating expenses, specifically programming expenses of $8.3 million and $25.6 million, respectively, which aligns with the reduction in Video RGUs between periods, along with a reduction in bad debt expense.

​

Incremental contribution

Incremental contribution is defined as subscription services revenue less costs directly incurred from third parties in connection with the provision of such services to our customers (service direct expense). Incremental contribution decreased $4.6 million, or 4%, during the three months ended September 30, 2025 compared to the three months ended September 30, 2024, and $10.9 million, or 3%, during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The decrease is primarily related to decreases in Video subscribers. See non-GAAP discussion below.

Selling, general and administrative expenses

Selling, general and administrative expenses increased $0.2 million, or 1%, and decreased $6.6 million, or 6%, during the three and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. For the three months ended September 30, 2025, the increase is primarily due to the increases in certain cash compensation expenses and increases in marketing expenses, partially offset by decreases in legal and professional fees and the receipt of business continuity insurance recoveries. For the nine months ended September 30, 2025, the decrease is primarily due to the receipt of business continuity insurance recoveries, reductions in certain cash compensation expenses, marketing expenses, and stock compensation expense, partially offset by increases in professional and legal services.

​

Depreciation and amortization expenses

Depreciation and amortization expenses decreased $5.5 million, or 10%, and $9.1 million, or 6%, during the three and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. The decreases are primarily due to assets reaching the end of their useful life partially offset by increases of equipment placed into service as we continue to expand our network.

Impairment losses on intangibles

The Company recognized a non-cash impairment charge related to its franchise operating rights of $1.5 million for the three and nine months ended September 30, 2025. The impairment charge is due to the decline in projected cash flows for one reporting unit, driven by a decline in actual and projected revenue. See Note 5 - Franchising Operating Rights and Goodwill for discussion of non-cash impairment charge.

Interest expense

Interest expense decreased $5.7 million, or 18%, during the three months ended September 30, 2025, compared to the corresponding period in 2024. The decrease is primarily due to changes in the fair value of derivative instruments, partially offset by higher overall debt balances between periods and a decrease in the cash received associated with the derivative instruments. The Company entered into five interest rate derivative instruments during the first quarter of 2024. The change in the fair value of the derivative instruments is presented in interest expense each period.

Interest expense increased $8.6 million, or 12%, during the nine months ended September 30, 2025, compared to the corresponding period in 2024. The increase is primarily due to higher overall debt balances combined with an increase in the interest rate for the revolving credit facility, an increase in debt amortization costs, and a decrease in the cash received associated with the derivative instruments. The increase is partially offset by changes in the fair value of derivative instruments.

Income tax (expense) benefit

We reported an income tax expense of $10.1 million and an income tax benefit of $6.5 million for the three months ended September 30, 2025 and 2024, respectively. The change in income tax expense was primarily impacted by the increase in valuation allowance against certain deferred tax assets, related to a portion of previously acquired federal net operating losses that may be unrealizable as of September 30, 2025.

​

We reported an income tax expense of nil and an income tax benefit of $10.1 million for nine months ended September 30, 2025 and 2024, respectively. The change in income tax expense was primarily impacted by the increase in valuation allowance against certain deferred tax assets, related to a portion of previously acquired federal net operating losses that may be unrealizable as of September 30, 2025.

​

Use of Incremental Contribution

Incremental contribution is included herein because we believe that it is a key metric used by our management to assess the financial performance of the business by showing how the relative relationship of the various components of subscription services contributes to our overall consolidated historical results. Our management further believes that it provides useful information to investors in evaluating our financial condition and results of operations because the additional detail illustrates how an incremental dollar of revenue generates cash, before any unallocated costs are considered, which we believe is a key component of our overall strategy and important for understanding what drives our cash flow position relative to our historical results. Incremental contribution is defined by us as the components of subscription revenue, less costs directly incurred from third parties in connection with the provision of such services to our customers.

​

Incremental contribution is not made in accordance with GAAP and our use of the term incremental contribution varies from others in our industry. Incremental contribution should be considered in addition to, not as a substitute for, consolidated net income (loss) and operating income (loss) or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows, or as measures of liquidity. Incremental contribution has important limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP as it does not identify or allocate any other operating costs and expenses that are components of our income from operations to specific subscription revenues as we do not measure or record such costs and expenses in a manner that would allow attribution to a specific component of subscription revenue. Accordingly, incremental contribution should not be considered as an alternative to operating income or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows, or as a measure of liquidity.

The following tables provide a reconciliation of incremental contribution to income from operations, which is the most directly comparable GAAP measure, for the periods presented:

​

​

Liquidity and Capital Resources

Our primary funding requirements are for our ongoing operations, capital expenditures, outstanding debt obligations, including lease agreements, and strategic investments. At September 30, 2025, the principal amount of our outstanding consolidated debt aggregated to $1,065.5 million, of which $21.5 million is classified as current in our unaudited condensed consolidated balance sheet as of such date. As of September 30, 2025, we had borrowing capacity of $98.4 million under our Revolving Credit Facility.

We are required to prepay principal amounts if we generate excess cash flow, as defined in the Credit Agreement. As of September 30, 2025, we had $22.9 million of cash and cash equivalents. We believe that our existing cash balances and operating cash flows will provide sufficient resources to fund our obligations and anticipated liquidity requirements over the next 12 months.

We expect to utilize cash flow from operations and cash on hand as funding sources, as well as the proceeds from our super-priority term loan to fund our greenfield expansion initiatives. We may also potentially engage in future financing transactions to further extend the maturities of our debt obligations. The timing and terms of any financing transactions will be subject to market conditions among other considerations.

​

As potential acquisitions or dispositions arise, we actively review such transactions against our objectives including, among other considerations, improving our operational efficiency, geographic clustering of assets, product development or technology capabilities of our business and achieving appropriate strategic objectives, and we may participate in such transactions to the extent we believe these possibilities present attractive opportunities. However, there can be no assurance that we will actually complete any acquisitions or dispositions, or that any such transactions will be material to our operations or results.

​

Our ability to fund operations, make capital expenditures, repay debt obligations and make future acquisitions and strategic investments depends on future operating performance and cash flows, which are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control.

​

Historical Operating, Investing, and Financing Activities

​

Operating Activities

Net cash provided by operating activities was $91.8 million for the nine months ended September 30, 2025 compared to $132.8 million for the nine months ended September 30, 2024. The decrease is primarily due to $41.4 million in timing differences of our receivables and payables, partially offset by a $0.4 million increase in cash operating income.

Investing Activities

Net cash used in investing activities was $137.7 million for the nine months ended September 30, 2025 compared to $163.9 million for the nine months ended September 30, 2024.

We have ongoing capital expenditure requirements related to the maintenance, expansion and technological upgrades of our network. Capital expenditures are funded primarily through a combination of cash on hand, cash flow from operations, and a portion of the funds received from the Priority Credit Agreement. Our capital expenditures were $139.3 million and $164.1 million for the nine months ended September 30, 2025 and 2024, respectively. The $24.8 million decrease in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 is primarily due to the timing of spend related to our market expansion initiatives in locations non-adjacent to our existing network support capital, as well as support capital and other.

The following table sets forth additional information regarding our capital expenditures for the periods presented:

​

Financing Activities

Net cash provided by financing activities was $30.0 million for the nine months ended September 30, 2025 compared to $29.3 million for the nine months ended September 30, 2024. The slight increase is primarily due to an increase in amounts drawn on our revolving credit facility, partially offset by increased debt and finance lease obligation payments and the payment of debt issuance costs related to the second amendment to the Priority Credit Agreement during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.