CHTR

Charter Communications, Inc. (CHTR)

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Charter Communication Inc. (CHTR)

Q4 2011 Earnings Call

February 27, 2012 09:00 am ET

Executives

Robin Gutzler - VP, IR

Thomas M. Rutledge - President and Chief Executive Officer

Christopher L. Winfrey - EVP and Chief Financial Officer

Donald F. Detampel – EVP Technology and President Commercial Services

Analysts

Philip Cusick – JPMorgan

Jeff Wlodarczak – Pivotal Research Group

Stefan Anninger – Credit Suisse Group

Bryan Kraft – Evercore Partners

Jason Bazinet – Citigroup

Amy Yong – Macquarie Research Equities

David Joyce – Miller Tabak & Company

Frank Louthan - Raymond James

Rich Tullo – Albert Fried & Company

Lance Vitanza - CRT Capital Group

Vijay Jayant - ISI Group

Tuna Amobi - Standard & Poor's Equity Group

James Ratcliffe - Barclays Capital

Presentation

Operator

Good morning and welcome to Charter’s Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent background noise. (Operator instructions) Thank you. And Ms. Gutzler, you may begin your conference.

Robin Gutzler

Thank you. Good morning, everyone, and welcome to Charter’s 2011 fourth quarter earnings call. This morning we issued a press release over PR Newswire at 8:00 am Eastern Time detailing our results. Before we proceed, I’d like to remind you that there a number of risk factors and other cautionary statements contained in our SEC filings, including our Form 10-K for the year ended December 31, 2011. We will not review those risk factors and other cautionary statements on this call. However, we encourage you to read them carefully.

Various remarks that we make in this call concerning expectations, predictions, plans and prospects constitute forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ from historical or anticipated results. Any forward-looking statements reflect management’s current view only and Charter undertakes no obligation to revise or update such statements or to make additional forward-looking statements in the future.

During the course of today’s call, we’ll be referring to non-GAAP measures as defined and reconciled in this morning’s earnings release. These non-GAAP measures as defined by Charter may not be comparable to measures with similar titles used by other companies. In today’s earnings release, we reported results in accordance with GAAP as well as pro forma results for 2010 and 2011.

The pro forma results reflect the divestiture and acquisition of Cable Systems in 2010 and 2011 as if they had occurred on January 1, 2010 unless otherwise noted. The year-over-year growth rates we will be referring to this morning are in a pro forma basis. Joining me on today’s call are Tom Rutledge, President and CEO, Chris Winfrey, our CFO and Don Detampel EVP, of Technology and President Commercial Services.

The presentation that accompanies their comments can be found on our website charter.com, under financial information. The press release and trending schedules are also posted on our website under Investor and News Center.

With that, I’ll turn the call over to Tom.

Thomas M. Rutledge

Thank you, Robin. I’m glad to be here. I’ve watched Charter for a long time and have always thought it’s a great company with terrific assets and real potential. The company has addressed some unique challenges in the past and I believe its now well positioned. I’ve been diving into the business and while still early on, and impressed with the team, the operations and the strategy for future growth.

In 2011, Charter improved its customer relationship growth trend and delivered solid financial results. The company grew by 2.7% -- grew revenue by 2.7%, increased adjusted EBITDA by 3.3% and generated free cash flow of $488 million. With a stronger balance sheet, Charter returned more than $725 million of capital to shareholders through share repurchases.

I’m excited about the year ahead and I believe there is significant opportunity for growth here. My focus will be on ensuring that the fundamentals of taking care of our customers are constantly improving, that we offer products and services that are better than any alternative and that we are a company that customers want to do business with. The team here is terrific and I’m excited to be onboard and to help Charter reach its full potential.

I want to thank Mike Lovett, for his support in the transition phase and his leadership in implementing many elements that are critical to our future success. Given that I’ve been at Charter for two weeks, I’m going to stop here and turn it over to Chris and Don to give additional details of the fourth quarter, the past year and our strategic priorities. Chris?

Christopher L. Winfrey

Thanks, Tom. We made significant foundational progress in 2011 and gain momentum in the back half of the year. We maintained our focus and we continue to execute consistently against our four strategic priorities, which included fundamentally improving the customer experience, leveraging our superior internet product to drive residential relationships, aggressively driving commercial growth, and changing the dynamic in video.

We made strategic investments in our business, which sets us up for future success. Specifically, we rolled out the first ways of a multi-year customer experience transformation, switch digital and DOCSIS 3.0 covered 86% and 93% homes passed at the end of the year. And we improved our existing product and added new residential and commercial offerings.

This past year, we continued to focus on customer relationships by using internet, our most competitive product today to get our foot in the door. Particularly in the more than 7 million homes where we don’t currently have a video relationship or our internet penetration is only 10%.

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