2015 Annual Report

® 2015 ANNUAL REPORT ® A Fortune 500 company and one of the nation’s largest cable operators, Charter Communications, Inc. provides advanced TV, Internet and Voice services to more than 6 million homes and businesses across 28 states. We connect our customers to the world through a superior high-capacity network, advanced technologies and the unwavering commitment of our approximately 24,000 employees to deliver outstanding service. Charter currently offers advanced cloud-based cable television, Video On Demand titles, fully-featured telephone service and Internet speeds that are among the nation’s fastest. Our commercial services unit, Spectrum Business™, provides scalable, tailored and cost-effective communications solutions to businesses of all sizes, including Internet access, data networking, business telephone, video/music entertainment services and wireless backhaul. Spectrum Reach™ provides a full range of innovative advertising sales and production services. Charter is headquartered in Stamford, Connecticut and trades on the NASDAQ Stock Market under the symbol CHTR. For more information, please visit Charter.com. TV INTERNET VOICE Over 200 HD channels The fastest Internet Reliable Voice service available, more than speeds starting at with no added fees satellite 60Mbps, 20x faster like the phone than DSL company charges Enjoy TV on your schedule with instant Connect to multiple No counting minutes access to thousands devices at the same with unlimited calling of On Demand movies time without annoying in the U.S., Canada, and shows slowdowns Puerto Rico, Guam and the Virgin Islands Watch over 170 live No data caps or TV channels anywhere extra fees Includes voicemail in your home on your and many popular portable devices with calling features the Spectrum TV App 1 MAKING OUR SPECTRUM PRODUCTS EVEN BETTER New Spectrum Guide™ We introduced our cloud-based Spectrum Guide which allows TV customers to browse, search and watch their favorite movies, shows and On Demand content easily, quickly and intuitively. Spectrum TV App Enhancements With the Spectrum TV App, customers can watch over 170 live channels anywhere in their homes on their mobile devices. Now, with Download To Go through the Spectrum TV App, customers can download their favorite movies and shows to watch wherever they are, even without an Internet connection. Spectrum TV App on Roku® Spectrum TV App made its debut on Roku®, giving customers another way to enjoy Spectrum TV. Spectrum WiFi We began the roll out of Spectrum WiFi which provides unlimited Internet access for customers when they are outside of the home. Now, customers can stay connected wherever they are and without incurring expensive data charges. New Spectrum.net The launch of Spectrum.net provides a superior online experience for our customers. With an improved layout, customers can easily access their email, Voice Online Manager and electronic billing. Plus, with enhanced self-help capabilities, customers can find the support they need. Dear Shareholders, Charter Spectrum, our advanced and “ high-value product suite, has made Charter the fastest growing cable company in the United States today. THOMAS M. RUTLEDGE President and Chief Executive Officer ” Our core strategy, to deliver superior products at highly competitive prices, combined with outstanding service, continues to drive Charter’s strong operating and financial momentum. And that momentum continues to improve, as Charter Spectrum®, our advanced and high-value product suite, has made Charter the fastest growing cable company in the United States today. Looking forward, we intend to apply the same customer-focused strategy that has worked so well at Charter, to drive growth across the broader footprint we will manage, following the close of our transactions with Time Warner Cable Inc. and Bright House Networks, LLC. The success of our consumer-focused strategy and the increasing value we provide to our customers is reflected in our 2015 performance metrics. We finished 2015 with 6.7 million residential and SMB (small and medium-sized business) customers, increasing our customer base by 6%. We grew revenue by 7.1% and our Adjusted EBITDA, excluding transactions transition costs, grew by 8.5%. Our Adjusted EBITDA growth continues to exceed our revenue performance, highlighting the cost benefits of providing high-quality service. That EBITDA growth, combined with declining capital intensity, is driving greater free cash flow. Charter generated approximately $550 million of free cash flow in 2015, more than double the amount of free cash flow we generated in 2014. 3 In video, our total customer base grew by 11,000 relationships in 2015, compared to a loss of 78,000 last year. This is the first time in more than a decade that Charter has added video customers during any 12-month period. Driving that growth is an improved video offering, with more HD than satellite, VOD and interactive REVENUE guide functionality on every device, backed by high-quality IN MILLIONS US-based customer service. 7% INCREASE We also continued to grow our Internet business in 2015, growing our residential Internet customer base by nearly 450,000 or 9%. Our low-cost, high-speed Internet offering provides great value to consumers, whether purchased inside one of our bundles or on a $9,108 $9,754 standalone basis. At year end, nearly 90% of our residential Internet $8,419 customers subscribed to Internet service that provided speeds of 60 Mbps or more. We continue to be an industry leader in Internet customer growth by offering high speeds at low price points, with no data caps, no usage-based billing, and no modem rental fees. And in commercial, we also continued to drive accelerating customer growth. We separated our SMB and enterprise segments 2013 2014 2015 early last year, and launched new pricing and packaging to both Pro forma for certain acquisitions as marketplaces. We are seeing the results we expected with SMB pri- if they occurred on January 1, 2013. mary service unit growth accelerating by 30% in 2015. We enter 2016 with three key priorities: executing on our core customer growth strategy, making the Spectrum product set even better, and closing and integrating the pending Time Warner Cable ADJUSTED and Bright House transactions. EBITDA IN MILLIONS We remain focused on growing our business by increasing long- 7% INCREASE lasting customer relationships. We grow loyal customer relationships by going to market with a simple, high-quality product set— Charter Spectrum—which we offer at very affordable prices. We hire, train and manage our employees, creating a skilled labor force $3,190 that provides a better service experience to our customers. Today, $3,406 $2,948 nearly 90% of our customer calls are handled onshore and in-house, and 95% of our service truck rolls are in-house. We are taking steps to make our Spectrum products even better, and will be rolling out our new cloud-based Spectrum Guide in 2016. The Guide’s more intuitive and feature-rich user interface improves both video search and discovery, fully enables our On Demand offering, and allows us to include Internet video in 2013 2014 2015 the guide which enhances the value of our service. It turns every See Use of Non GAAP Financial Measures on page F-50 of this TV into a connected Smart TV, and it allows us to integrate Annual Report. Pro forma for certain acquisitions as if they occurred on third-party video services, including over-the-top providers, such January 1, 2013. as YouTube®, Netflix®, and Hulu®—giving consumers the ability 4 to search and view all the content they are interested in, without changing consumer-owned hardware or devices. Our initial Spectrum Guide launches are working and scaling well, and customers are responding positively. Over the course of 2016, we will also expand our On Demand library with thousands of additional titles, and we will continue to improve our capabilities on additional devices with more live, On Demand and download to go content. And, in Internet, we are beginning rollouts of Spectrum WiFi, which provides unlimited Internet access to our residential customers when they are outside the home through hotspots. RESIDENTIAL & SMALL AND Finally, we have made good progress on our transactions with Time MEDIUM BUSINESS Warner Cable and Bright House, which will bring significant benefits CUSTOMERS(1) IN THOUSANDS to all of our stakeholders. For consumers, these transactions will 6% mean better products at better prices, with high-quality service. INCREASE For our employees and vendors, our new company will offer greater opportunities, as we grow our business, develop new products and compete in new lines of business. And for shareholders, our trans- 6,322 6,674 actions will create a new entity with greater scale, an enhanced 5,936 footprint, new revenue and product innovation opportunities, and significant cost savings and tax benefits—all of which will lead to faster customer growth, greater financial growth, and significant long-term value. Our transactions financing and integration plans are in place and we are prepared to bring Charter’s value-rich product offering and 2013 2014 2015 (1) 2013 customer data represents customer-focused approach to the new footprint. We look forward prior reporting methodology. to closing shortly, so that we can provide these benefits to the communities we will serve. I would like to thank all of our employees for their dedication and hard work in bringing our highly-competitive consumer-friendly

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