Hello, and welcome to Charter Communications First Quarter Investor Call. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I will now turn the call over to Stefan Anninger.

Thanks, operator, and welcome, everyone. The presentation that accompanies this call can be found on our website, ir.charter.com. I would like to remind you that there are a number of risk factors and other cautionary statements contained in our SEC filings, which we encourage you to read carefully. Various remarks that we make on this call concerning expectations, predictions, plans, and prospects constitute forward-looking statements that 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. On today's call, we have Chris Winfrey, our President and CEO; and Jessica Fischer, our CFO. With that, let's turn the call over to Chris.

Thanks, Stefan. During the first quarter, we lost 72,000 Internet customers. Despite lower Internet sales, we added nearly 500,000 Spectrum Mobile lines and close to 2.3 million lines year-over-year. We now have more than 8.2 million total mobile lines. With still low mobile penetration of Internet customers and passings, we have a long runway for customer and financial growth with the nation's fastest mobile service at incredible value. Revenue was relatively flat in the quarter while adjusted EBITDA grew by 2.8%. During the first quarter, our Internet customer growth remained challenged by a low-move and generally low-activity environment coupled with continued elevated competition at least in the short term and a small impact from fewer low-income connects due to discontinued ACP availability. Churn remains at historically low levels. Telephone Internet continues to compete for gross additions and has expanded its addressable market within our footprint. We remain confident in our ability to return to healthy long-term growth. Our Internet product is faster, and it's more reliable. Our pricing is lower when similarly bundled with mobile. The cell phone companies will face capacity challenges as customer bandwidth grows. In the first quarter, wireline overbuild activity continued at a similar pace. Given the value of our converged products, we resisted chasing some less rational promotional offers from overbuilders. As we move forward with our key strategic initiatives, we believe our differentiated converged connectivity products with superior speeds that save customers money and a video product with increasing value and utility to customers provide us with significant competitive advantages and a platform to grow customers, penetration, EBITDA, and free cash flow over time. In Internet, data usage continues to grow and demand for faster speeds will grow with it. During the first quarter, Internet customers who do not buy traditional video from us use nearly 800 gigabytes per month. We now offer 300-meg, 500-meg, and 1-gig symmetrical speeds in our first high split market. Later this year, we'll begin launching the next wave of markets with distributed access architecture technology. When completed, we'll be capable of offering 5 by 1 gigabit per second speeds in these markets with even better network performance. The next phase of markets will be upgraded to 10 by 1 gigabit per second speed and the ability to offer fiber on demand. Ultimately, we'll see lower contact rates and truck rolls across these upgraded markets, achieving both lower costs and a superior product. We expect to complete our network evolution initiative in 2026, all at an incremental cost of just over $100 per passing, excluding the benefit of operating and capital savings that result from the project. Our mobile offering also continues to evolve and improve. Earlier this month, we began offering Anytime Upgrade to customers within our Unlimited Plus offering. Anytime Upgrade allows new and existing Unlimited Plus customers to upgrade their phones whenever they want, eliminating traditional wait times, upgrade fees, and condition requirements. We are the first mobile provider to include this level of freedom within a rate plan. We also recently launched a new repair-and-replacement plan for just $5 per month. Anytime Upgrade, part of Unlimited Plus, and our repair-and-replacement plan are each profitable. Spectrum One continues to perform well beyond its first anniversary and offers the fastest connectivity with differentiated features like mobile speed boost and seamless connectivity to the Spectrum Mobile network across Android and iOS devices. We still have a lot of room to grow our mobile business. Today, less than 8% of our total passings take our converged offering of Internet and mobile. We remain underpenetrated despite having a differentiated and superior offering with market-leading pricing at promotion and retail. From a dollars perspective, we captured less than 30% share of residential mobile and Internet dollars spent in our footprint today. Mobile will be a meaningful driver of EBITDA and cash flow going forward with what is still an untapped ability to drive overall customer relationship growth. Finally, turning to the evolution of our video product. We now offer a unique modern user experience with Xumo, which offers both linear and direct-to-consumer content on one device, combined with packaging and pricing options that offer choice, value, and utility across FAST, SVOD, direct-to-consumer apps, and linear video services. In January, Disney+ became available to all Spectrum TV Select customers nationwide at no additional cost, with ESPN+ launched to Select Plus customers in March. ViX, a Spanish language DTC product, and regional sports DTC products, will also be available to customers at no extra cost within their respective packages. We expect our hybrid DTC-linear model to be fully deployed next year. We'll be able to deliver value for our customers and programming partners through fully bundled hybrid services, genre-based packages, selling DTC a la carte, and potentially bundled DTC services to our broadband customers. In late January, we launched our Spectrum TV Stream package, a 90-channel non-sports general entertainment package priced at $40 per month. TV Stream provides a compelling content offering at an attractive price from programmers like Paramount, Warner Bros. Discovery, Disney, Fox, and A&E. While the video business is clearly under pressure, we believe that flexible and attractively priced packaging options across all forms of video channels really, integrated within a modern user interface in a more frictionless environment, can recreate value in the ecosystem for our customers, programmers, and distributors. So when we step back, we clearly recognized some short-term market challenges, and we've embraced the opportunity to become an even better operator, leaving no stone unturned in our go-to-market and our efficiency initiatives. In the meantime, we're growing a unique converged product at a rapid pace which can grow EBITDA through a competitive investment cycle. In long term, our network and customer demand products, pricing, and packaging capabilities, our service infrastructure and the associated investments we're making today position Charter for sustainable growth and value creation. And with that, I'll turn the call over to Jessica.

Thanks, Chris. Let's turn to customer results on Slide 5. Including residential and SMB, we lost 72,000 Internet customers in the first quarter, and video customers declined by 405,000. In mobile, we added 486,000 mobile lines. Wireline voice customers declined by 279,000. Our mobile product continued to perform well. Although we saw lower mobile gross adds year-over-year tied to lower gross Internet additions, we also saw lower overall mobile churn rate year-over-year and sequentially. Customers who signed up for our Spectrum One product in the first quarter of 2023 reached their 12-month anniversary this past quarter. Similar to last quarter, those promotional roll-offs did not drive incremental Internet churn. In fact, our Internet churn rate also declined year-over-year. As we always expected, Spectrum One lines are performing well, and our converged offering drives higher mobile sales and longer customer lifetimes. Turning to rural. We ended the quarter with 493,000 subsidized rural passings. We grew those passings by 324,000 over the last 12 months and 73,000 in the first quarter. It's a bit of a slowdown from Q4, as we noted it would be on our last call, given winter construction seasonality. Penetration growth continues to exceed our expectations, and customer growth in our subsidized rural footprint increased with 35,000 net customer additions in the quarter. We continue to expect to activate approximately 450,000 new subsidized rural passings in 2024, about 50% more than in 2023. We also continue to expect our RDOF build to be completed by the end of 2026, 2 years ahead of schedule. The RDOF and ARPA program rules have been successful in driving large-scale private capital builds. With respect to BEAD, most of the state's rules are still working through the NTIA review process. We expect some states will have a regulatory environment conducive to private investment, while others will not. We'll be disciplined in our investment approach with the continued expectation that some opportunities with appropriate ROIs will be available. Before turning to our financial results, I wanted to make a few comments regarding the Affordable Connectivity Program. An ACP renewal now appears unlikely for the program's 23 million recipients nationwide and for our 5 million Internet customers receiving a subsidy. We will do everything we can to preserve our relationship with the ACP subsidy recipients, and we expect to keep the vast majority of them as customers. We have a number of ways to assist those that may lose their ACP subsidy, including our Spectrum Internet Assist program and Internet 100 product. We're also offering all of our ACP customers a free mobile line for 1 year. The success of our Spectrum One offering has shown that we can create long-term converged connectivity customers by saving consumers hundreds or even thousands of dollars on their mobile bill. Even after the initial promotional period ends, we will still be able to save these customers the equivalent or more than the $30 ACP subsidy benefit that they are currently receiving. The majority of ACP recipients in our customer base were Internet customers before the start of the ACP program. The vast majority of our ACP customers also pay something out of pocket for their Internet service. Ultimately, we will lose some customers, and our Internet ARPU and bad debt expense may have one-time pressure, but we expect the impact on Charter to be mostly limited to the second and third quarters of this year. We will provide transparency for those impacts in our quarterly reporting. Moving to the first quarter financial results, starting on Slide 6. Over the last year, residential customers declined by 0.7%, driven by video-only customer churn. Residential revenue per customer relationship declined 0.1% year-over-year, given a higher mix of non-video customers and growth of lower-priced video packages within our base, mostly offset by promotional rate step-ups, rate adjustments, and the growth of Spectrum Mobile. Turning to commercial. SMB revenue declined by 0.3% year-over-year, reflecting lower monthly SMB revenue per SMB customer primarily due to a higher mix of lower-priced video packages and a lower number of voice lines per SMB customer. These factors were slightly offset by SMB customer growth of 0.2% year-over-year. Enterprise revenue grew 3.8% year-over-year driven by enterprise PSU growth of 6.9% year-over-year. Excluding all wholesale revenue, enterprise revenue grew by 5.5%. First quarter advertising revenue grew by 10% year-over-year given political revenue growth, and core ad revenue was essentially flat year-over-year. Other revenue grew by 2.4% year-over-year primarily driven by higher mobile device sales. In total, consolidated first quarter revenue was up 0.2% year-over-year and down 0.1% year-over-year when excluding advertising. Moving to operating expenses and adjusted EBITDA on Slide 7. In the first quarter, total operating expenses declined by 1.5% year-over-year. Programming costs declined by 8.2% year-over-year due to the decline in video customers of 8% year-over-year and a higher mix of lighter video packages. These factors were partly offset by higher programming rates. First quarter 2024 programming costs include around $30 million of favorable adjustments versus $50 million of favorable adjustments in the prior year period. Other cost of revenue increased by 9.8% primarily driven by mobile service direct costs and higher mobile device sales. Cost to serve customers were essentially flat year-over-year with additional activity to support the growth of Spectrum Mobile and higher bad debt expense, mostly offset by lower service transactions per customer, including productivity from 10-year investments. Sales and marketing costs declined by 2.7% primarily driven by lower labor costs, partly tied to lower connect volume. Finally, other expense grew by 0.5%. Adjusted EBITDA grew by 2.8% year-over-year in the quarter, and when excluding advertising, EBITDA grew by 2.2% year-over-year. Looking ahead, our goal is to deliver solid EBITDA growth, and we believe we can do that even as we make significant investments in the business, face a challenging competitive environment, and reach the likely end of the ACP program. Our residential revenue will be supported by Internet ARPU growth and our growing mobile customer base. In addition, mobile's contribution to EBITDA continues to improve as the business scales. We've also lapped the significant investments that we made in our employee base, so the related EBITDA drag should be mostly behind us. Finally, we continue to carefully manage our expenses across the business. While we're not going to do anything that would impact our sales or service capabilities, this quarter's cost to serve customers and sales and marketing expense results demonstrate our ability to drive efficiencies into the business. In the second quarter, we will face some tough expense comparisons, particularly in other expenses as well as ACP headwinds. While our second quarter EBITDA growth will be muted, our expense management process is clearly working. Financial growth in the back half of the year should accelerate given our expense management initiatives, Spectrum One promotional roll-off, and political advertising revenue. Turning to net income on Slide 8. We generated $1.1 billion of net income attributable to Charter shareholders in the first quarter, up from $1 billion last year, driven by higher adjusted EBITDA and a gain on the sale of towers, partly offset by higher income tax and interest expenses. Turning to Slide 9. Capital expenditures totaled $2.8 billion in the first quarter, about $325 million above last year's first quarter spend. Line extensions totaled $1 billion, $69 million higher than last year driven by our subsidized rural construction initiative and increased residential and commercial greenfield and market fill-in opportunities. First quarter capital expenditures, excluding line extensions, totaled $1.8 billion compared to $1.6 billion in the first quarter of 2023 driven by higher spend on upgrades, rebuild, primarily network evolution, and higher CPE spend due to purchases of Xumo Stream boxes. For the full year 2024, we continue to expect capital expenditures to total between $12.2 billion and $12.4 billion, including line extension spend of approximately $4.5 billion and network evolution spend of approximately $1.6 billion. Turning to free cash flow on Slide 10. The cash flow in the first quarter totaled $358 million, a decrease of approximately $300 million compared to last year. The decline was primarily driven by an increase in capital expenditures and a one-time settlement payment in the first quarter of 2024, partly offset by a less unfavorable change in working capital year-over-year and higher adjusted EBITDA. We finished the quarter with $97.8 billion in debt principal. Our current run rate annualized cash interest is $5.2 billion. Given our long-dated and 85% fixed rate debt structure, our sensitivity to higher rates is relatively low. If we refinanced all of our debt due in 2025 and 2026 at current rates, the impact to our run rate interest expense would be less than $140 million. As of the end of the first quarter, our ratio of net debt to last 12-month adjusted EBITDA was 4.41x, which is lower sequentially and year-over-year. We expect to continue that trend, moving closer to the middle of our 4 to 4.5x target leverage range through the end of this year. We remain fully committed to maintaining our split-rated debt structure, including access to the investment-grade market given the significant benefits it offers to all of our providers of capital. We continue to be confident in the long-term trajectory of the business. We believe our levered equity strategy, including share buybacks, combined with the investments that we are making in the business, will drive value going forward. During the quarter, we repurchased 1.7 million Charter shares and Charter Holdings common units totaling $567 million at an average price of $339 per share. With the continued temporary impact from cell phone Internet competition and the potential headwind from the end of ACP, we will continue to face short-term customer growth headwinds. Despite these short-term challenges, we are competing well. We have a very attractively structured balance sheet, and we're focused on driving healthy EBITDA growth in 2024 through a short-term competitive and investment cycle. So we're well positioned today and for continued future growth. With that, I'll turn it over to the operator for Q&A.

Our first question will come from John Hodulik from UBS.

If I could follow up on the ACP comments, first of all, just any additional color you guys can provide over the subscriber and ARPU impacts of that program winding down in the second and third quarter? And it sounds like given the cost-cutting opportunities and the commentary, you still believe you can grow EBITDA for the year. That's number one. And then number two, I thought the commentary about the churn on the video side from the Disney renewal was interesting. Chris, is that a trend that you expect to continue, especially as you sort of roll over your existing or go through more renewals and add more D2C services to your lineup?

Sure. Let me try to tackle those, and Jessica may want to chime in here as well. The first one is on ACP and what we estimate. John, the non-renewal of ACP, there are 23 million customers who have it today. It's unfortunate, but it's certainly going to have a negative Internet customer growth impact for everyone, including us. That's going to happen in what's already a seasonal Q2 and probably the third quarter as we work through likely non-pay activity. As you think about the extent of those losses, it will depend on a few things. One, first, being the stickiness of our retention offers. That includes us doing a free mobile line for all ACP customers which allows customers to save as much, if not more money on a monthly basis than the subsidy we already offered by ACP. In some cases, it can be much closer to EBB or maybe even more. We do have a Spectrum Internet Assist, and we have Internet 100. So we have products that we can move people to as needed. The second thing I would say is it's going to depend on how well we really execute on those retention tactics. The last thing is the way we manage what's likely to be an elevated non-pay environment, managing that to the best of our ability for the benefit of customers. This is an unprecedented event. In almost 30 years of cable, I haven't seen anything like this before. The short-term impact is difficult to predict. But in the end, I'm really confident we're going to manage through it successfully. It will be a one-time event, both on subscribers and maybe an initial suppression of ARPU, but it's not going to impact our long-term growth potential.

Yes. As you think about EBITDA across the year, as we pointed out and I would just highlight it, there are some pressures on EBITDA in Q2 because of the comps to last year as well as likely, if there's a non-pay impact, there could be some bad debt pressure inside of Q2 as well. So I would expect our EBITDA growth to be more pressured in Q2. But we see the ability for it to accelerate across the rest of the year when you consider the roll-off of Spectrum Mobile, political advertising, and our continued expense initiatives in the business. Because of that, in all scenarios we’ve looked at, we continue to expect EBITDA growth in the year.

Yes. And so EBITDA, we're very confident on that. Giving a hard estimate on subscriber impact, for all the reasons I mentioned, is difficult. But we're going to outline that quarter by quarter and provide that transparency for people along so they can see what's the underlying growth rate. Your other question, John, I want to make sure I understand, was on video churn. We rolled out, at the beginning of the quarter, the Disney+ to all Spectrum Select customers and above, and to Select Plus customers, our more sports-oriented package on top. We rolled out ESPN+ in March. Very early on, we had good take-up on that product along the way. But there was nothing that was a rotation of our subscriber base inside there. There was not a negative contributing factor to adding those in. I would highlight, in an environment where video these days really is coming in as an attach rate to Internet, we have lower Internet sales opportunities that have an impact on video. The video churn rate stays relatively consistent. But the combination of having both lower selling opportunities for Internet and therefore lower attach rates for video, combined with the fact that we did do a programming cost increase pass-through inside of Q1 contributed to the video loss in the quarter.

Just maybe unpacking the EBITDA outlook a little bit more. Jessica, last quarter, you gave us some helpful guidance on a few expense line items for the year. I think programming, cost to service, and marketing come to mind. I don’t know if you had any updates on any of those given some of the moving pieces. I just wanted to check on that. And then secondly, for either of you or both of you, just on broadband competition. Could you spend a minute just talking about sort of how you see your product competing right now with fixed wireless, which is sort of everywhere or in a lot of markets, and then the wireline overbuild piece?

So Ben, on the line item expense guidance that we gave earlier in the year, I don’t have an update to any of those specific items. What I would tell you is that, because of some of the work we're doing around expenses across the business, I think it's possible that we come in lower than what we guided to, to begin with. I don't have a revision, but I think it's possible we come in on the low side.

Okay. Even with the bad debt comment you made earlier?

That’s a fair call-out. The exact amount of the bad debt related to ACP is hard to predict because it’s a matter of what the mix is between customers that go non-pay and customers that sort of contact you in some other way. So that’s fair call-out. On items other than that, I think the possibility is that we do better.

You've got a lower transaction environment, plus all the expense management activity that we're doing, and that will have a significant impact to cost to serve as well as sales and marketing as well. And the broadband competition, maybe just take a step back and talk a little bit more detail about the operating environment and competitive and the results in that context. The first thing I think is important to just keep in mind is that our churn continues to be at or below historic lows, so very good. Bear with me, but we actually performed a little better in the first quarter in competitive switching versus last year. Someone may say, 'How does that work?' The real issue has been selling opportunities for broadband were actually much lower in the marketplace year-over-year, driven by continued lower year-over-year move and household formation rates. There is some reversion to pre-pandemic mobile-only levels the past two quarters. At the same time, as you mentioned, there's still some cell phone Internet expansion, and that's competing with what is for a much lower opportunity set. If you add to that, then just a bit of impact from the removal of ACP connects that started in early February, that’s really what drove us to the loss of roughly 70,000 Internet customers. In this environment, small shifts in gross adds, in particular, or even churn, which hasn’t been the case, it just really has an outsized impact on net adds. That’s going to definitely, as I mentioned before, be the case in the seasonal Q2, also with the end of ACP, all of which is temporary in nature. The bigger question is what are we doing? As I mentioned, we still know, and I think everybody agrees, we have the best products. We have it at the best all-in price, particularly when you're combining broadband and mobile, which we’re often competing against. Our network evolution to symmetrical and multi-gig wireline and wireless capabilities, and we're doing that at a low cost of $100 per passing. As I mentioned, we have the expansion of that best-in-class network and converged products to homes with no broadband today. We’re doing the right things and being competitive by saving customers lots of money with fast products. We do that with a 100% in-house onshore service structure. When you put that together with what I mentioned in the prepared remarks about continued increasing customer demand for data, it means we're very well positioned to return to sustainable growth over time. In the meantime, we're heads down on execution. It doesn’t mean that we don't have short-term opportunities. We’re leaving no stone unturned on go-to-market. We have great assets and ability to package and price in ways that are new and innovative. We're trying to do that while still being disciplined around pricing, particularly with respect to wireline overbuild.

I guess the first one for Jessica, just on the change in your leverage target navigating towards the midpoint of the range. Would love to just get some more context behind that. You sort of mentioned earlier in the script that the risk of higher rates isn't a material concern. Does this navigating down in the leverage range reflect lower confidence in the cash generation in the business given the competitive environment?

Yes. So Jonathan, I would say our confidence in the business hasn't changed. We remain comfortable with our 4 to 4.5x range based on the outlook that we have. But I think being at the height of the investment cycle, we thought that creating a little bit of headroom was appropriate. We constantly reevaluate our position. We'll continue to do that. But we continue to believe in the long-term trajectory of the business. We think the investments that we're making will deliver strong returns. We know that maintaining the levered equity strategy, including buybacks and leverage levels overall, is important to continuing to drive value.

I would just add on. Jessica said it, there's no lack of confidence. We have good, strong free cash flow today and have even growing free cash flow, and much more so as we get through these onetime investments. It’s really, as Jessica has already said, about making sure we ensure the investment-grade structure we have. That’s important to us, our debt holders, and our equity holders as well.

And Chris, just a follow-up on that. Were the rating agencies asking you to bring leverage lower in the range? Are there things that we could look for in the business that would make you feel comfortable to go back to the high end of the range over the next few quarters?

Jonathan, we're in regular contact with all three of the ratings agencies. Certainly, I think there has been some additional conversation across debt holders and the rating agencies, given the higher CapEx that we have in the business and the short-term pressure that it puts on free cash flow. The tone of the broader market indicates that you might have seen S&P issue a tearsheet at the end of last week that addressed ACP and the competitive environment. I think their concerns are similar to those of equity holders, though they noted that they don't expect our ratings to change even if they might adjust their triggers somewhat. Even if our corporate family ratings were to change, they didn't expect any impact to the investment-grade rating. We constantly communicate with them. It made sense for us to create a little bit of headroom. As I said, we constantly reevaluate. It's certainly possible that we could move back up in the range at some point, particularly thinking about free cash flow growth coming back as the investments wind down.

I'd put that one to being responsive, and at the same time, given the current stock price, we want to do as much as we can within that responsiveness.

Chris, I want to maybe ask two questions. One broader strategic question and then just one clarification from Jessica. On the first one, you said something to me a while back that I've been thinking about, about the way you think about convergence. You characterized the Spectrum One offer not really as an offer but as a new product category. I wonder if you could just talk about that a little bit and particularly in the context of AT&T talking quite frequently about their converged offering in the portion of their footprint where they have it. T-Mobile now with their Lumos deal yesterday, obviously searching around for a converged offering. How much of the market is actually going in that direction?

So Craig, I'll start on the first one on convergence. The best way to do this is, let me ask you 15 years ago, what’s the speed of your Internet connection? You would have connected to the back of the computer in your kitchen. Ten years ago, it might have been, here it is on WiFi on my couch or out on the terrace. Today, if you're pulling out of the driveway and I say, 'Who's your Internet provider right now?' you’d say, 'I don't know, I don't care. It just has to work, and it has to be fast.' If that's people's definition of broadband connectivity, then we're the only provider in our footprint that can provide that uniform, ubiquitous broadband Internet in a seamless connectivity way. We have the Internet. We have the WiFi. Our 5G cellular is a backup service when Internet and WiFi aren't available. Over the last report, it was 87% of our traffic was going over our WiFi increasingly with CBRS. 5G is the backup radio. It’s the slowest portion of our network. We have the ability to offer something in the marketplace. The challenge is that's not the way it's been sold, and it doesn't align with customer purchase behavior today. So there's an education challenge when we package, price, and market that. And over time, is mobile really a product? It’s really an extension of an Internet connection. If you think about it, 15 years ago, it was a wireline service going to a tower. Today, we’re doing that from WiFi inside the home. We have the ability to provide that service in a competitive way.

Craig, on the other side, wholesale is a little less than 20% of overall enterprise revenues.

Right. The piece of that, the piece that's pulling that is really cell tower backhaul... traditional wholesale is relatively steady, and it’s the cell tower backhaul that's in systemic decline, if you will.

I had two if I could. First, Jessica, related to free cash flow. I was wondering if you could size for us the one-time payment in the first quarter that impacted free cash flow. And also if you could help us understand how you're thinking about working capital usage this year. And then, Chris, just on network neutrality. I was wondering if you could share your thoughts on the SEC's recent reinstituting of net neutrality rules. Any concerns with the rules? Do they impact the way you're running the business in any way, whether it’s on the home broadband or on the mobile side?

Yes. So Bryan, the one-time payment that impacted free cash flow was on the order of $150 million to $180 million in that range. From a working capital perspective, Q1 is always a negative working capital quarter for us. I fully expect that we'll sort of make back close to flat over the course of the year the negative working capital that we had. Excluding working capital, excluding the mobile device side in the first quarter. Obviously, mobile continues to be a drag on working capital because of the device sales, and you should expect that piece to continue.

Bryan, on the net neutrality, I’d start from the get-go. The key concern isn’t net neutrality; it’s the Title II regime. We don’t block, we don’t do paid prioritization, we don’t throttle, and we don’t even have data caps. We believe that customers should have unlimited usage of the service that they’re paying for. The question has really been around Title II and what that brings, things around forbearance on rate regulation, the additional unintended consequences of where that can lead to on regulation for a product that, without regulation, has been very successful at delivering tremendous value for consumers over a couple of decades. Where we're at in the Title II debate with the FCC, there's zero surprise. It's exactly where everybody thought we would be, and we're going to continue to go through that process. Unfortunately, it seems like over many years this kind of works its way probably back to a court at this stage. Hopefully, over time, we can get a standard set by Congress that puts this to bed once and for all. That’s always been the hope. Title II is not the right way to regulate what we’re already doing well.

Two questions. First, with respect to the residential broadband ARPU performance, can you unpack the benefit in the quarter from the Spectrum One promotions rolling off and how the potential benefit of this in terms of size can move through the year as more customers start getting back to maybe the normal course rate levels? And then just secondly, in the press release for quite some time now, you noted customers, and I hope I'm framing this right, that are broadband subscribers where there may have been some suspension of collections for other Charter services. I’m curious what happens to those customers if ACP is discontinued? Do those disclosures provide any insight on how to quantify potential customer risk or churn risk if this program is discontinued?

Yes. Starting on the first one on the Internet ARPU. The Spectrum One allocation was 70 basis points of drag year-over-year on our net ARPU growth in the quarter. The GAAP Internet ARPU increased by 1.7%. It would have been 2.4% excluding the mobile allocation for free lines. I would generally expect that the gap in those two growth rates should narrow over the course of the year because the base of free lines becomes more stable with the promotional roll-off. However, I talked about that we are offering all of our ACP customers a free mobile line for a year, and depending on the level of success of that program, if we did see a reacceleration in the number of free lines, the gap between those two things could widen again. Talking about what you see inside of the footnote and the aging. We have had a process over time where we save customers into ACP. If there was a customer who took multiple lines of business, say they were an Internet and video customer and went into a non-pay status but they were eligible for ACP, what we would do would be to downgrade the customer to an Internet-only product that was fully covered by the ACP subsidy, which enables them to continue their Internet service. They would no longer have whatever the additional services were that were on their accounts. We have held those balances, though they're fully reserved. They’re sitting in receivables but they’re also sort of fully written off already in the bad debt reserve process.

If you think about it just from a customer perspective and how we were trying to be responsive to the government request, we wanted to make sure that these customers entering into a collection cycle on video or phone didn’t suppress their ability to continue to receive the ACP benefit and keep their connectivity. This is a classic example of the base of customers that we're going to work through, as I talked about from a collection cycle. We’re doing everything we can to make sure that they stay connected to Internet over time. But there are certainly challenges there. We’ll go through the month of May with a partial ACP in accordance with what the government outlined. It's going to be a partial credit of $14, and we’ve agreed to make it $15 just to round it and make it fair to customers. That’s what we’ll do inside of May.

Chris, given your focus on improving the video consumer proposition, I think you have a pretty substantial programming contract coming up very shortly. Can you just talk about whether there's a big opportunity there to resize your programming costs associated with that portfolio of channels?

So on the first question, I don’t want to delve into detail on individual programming renewals, and we've been generally very successful at getting renewals throughout the years. Our goal, though, is to make sure that we change the model so that we create value for customers. That starts with not asking them to pay twice for the same product, which is a debate we’ve had historically. The challenge is that it requires us to approach the marketplace in all of our deal renewals and say, 'We've got to fight for the customer.' If they have a path to get a product that’s equivalent or even better for a lower price, we shouldn't just be selling that product, that’s the way we should go to market. We have a distribution engine for linear hybrid, DTC, and a large base of broadband customers that we can use that’s unique. We want to create a video ecosystem that works for customers. Today, it doesn’t, and it’s been broken for a while. We think we can create a product that we’re proud to put on our Internet bill.

On the buyback authorization side, I'm going to make sure we answer that question. The authorization as of the end of the quarter, as you pointed out, is a little bit lower than what you would typically see. There are multiple mechanisms by which that gets renewed. We have increased the buyback authorization since that point in time. Just to be clear, we expect to be able to maintain our buybacks over the course of the year even as we delever. So you should not read that through as any sort of sign about the direction of the program.

Operator, we'll take our last question, please.

The last question will come from Steven Cahall with Wells Fargo.

Chris, earlier, you said you're confident in returning to long-term growth, and you spoke a lot about the overbuilding activity that you're seeing. I think the challenge many of us have is when we pencil that out and kind of think about penetration of fiber and then we look at your passings growth and think about penetration as well, it's tough to see when things return to growth on the subscriber side, maybe ex-rural. I was wondering if you could just give us any thinking as to your color and timing when we might start to see subscriber growth reaccelerate to a positive level.

I'm not going to provide a detailed timeline for the timing to reaccelerate, just because I want to be conservative and recognize that it’s a very fluid space. Clearly, we haveACP going on right now which is going to be a one-time hit. You have cell phone Internet which will reach capacity, and the timing of that isn't entirely clear. You also have fiber upgrades that have been announced and are pretty far along from what was actually announced. So I think if you put that all together and flip it, and say get past ACP and the pace of fiber upgrades is relatively stable, I think over time should actually start to decline. Cell phone Internet will run out of capacity, and you’re already starting to see some signs of that paring back. All of which bodes well. When you look at our Internet product quality in 100% of the market, particularly and even more so in those that don’t have a gig overlap, which is about half. You combine that with the unique ability to provide a very attractively priced mobile product that’s actually the fastest mobile product in the business simply because it largely rides on our gigabit wireless infrastructure. We have a structural advantage not only on quality but the ability to save customers hundreds and even thousands of dollars. I sit back and look at that and say, it isn’t a question of if. It’s just a question of when. As some of these short-term pressures set back, that’s when you’ll start to see it turn. Honestly, we haven’t been the best at predicting the exact timing of that. I said last quarter, we own that. I want to be careful that I’m not overextending ourselves here either. But I think it’s more important just to take a step back, look at what the product we have is, what the network capabilities we have, and it’s only getting better. If you tack on to that the rural passings, where it's just math in terms of the penetration, the net additions we’re going to get on the back of that investment, I still think the future's bright for Charter.

On the mobile working capital side, so you point out, without a doubt, the drag on working capital is driven by the number of phones or other mobile devices that you sell subject to EIP notes. If we were to end up with additional devices because of having additional mobile customers as a result of our work on ACP or if we end up with some additional devices because of the Anytime Upgrade program, which is also possible, there could be some acceleration in that drag. I would tell you, as we've been building our mobile business, we haven't taken advantage of some financing options that are available for us related to having those EIP notes as part of our asset stack. It hasn't yet made sense for a wide variety of reasons including just building the scale for a program like that. I think it's also possible that we could offset some of that drag in working capital by working through some of those financing mechanisms.

We’re reaching a size at which that becomes a viable option. Good. Well, thank you, everyone, for joining the call. I look forward to talking to you again on the next one.

Thanks, operator.