“As of the end of the third quarter, including the impact of the Cox and Liberty Broadband transactions and including the impact of our second quarter debt repurchases and assuming the success of the exchange offer announced yesterday evening, we expect our ratio of net debt to last 12-month adjusted EBITDA to be just above 3.9x.”

In context

“Jessica Fischer : Thanks, Chris. Please note that any forward-looking financial or customer information that we provide in today's discussion or presentation does not include Cox or any transition costs related to Cox integration planning, unless otherwise noted. Now let's please turn to our customer results on Slide 7. Including residential and small business, we lost 172,000 Internet customers in the second quarter, driven by lower connects year-over-year, while churn was essentially flat. As Chris has said before, we have been facing top-of-the-funnel softness. We continue to see expanded fixed wireless competition versus a year ago, including lower sales from low-income consumers, ongoing mobile substitution and fiber overlap growth at a rate similar to prior quarters with aggressive promotions by certain competitors. Though I would point out that we continue to lead the market in converged connectivity pricing at connect and have higher market share than our fiber competitors even in our mature fiber overlap. As it relates to satellite, so far, we haven't observed meaningful share loss to Starlink, including in our subsidized rural footprint, but we continue to monitor it closely and take it seriously. In mobile, we added 406,000 lines with higher gross additions year-over-year, offset by higher disconnects. Video customers declined by 21,000 versus a loss of 80,000 in 2Q '25, with the improvement primarily driven by lower video downgrades, lower customer churn and higher upgrades year-over-year, resulting from our seamless entertainment product improvements, including our programmer app inclusion packaging and the new pricing and packaging we launched in late 2024. New connects to our fully featured video package with apps were also better year-over-year with some benefit from the World Cup. In rural, we continue to see strong customer relationship growth, generating 47,000 net customer additions in our subsidized rural footprint in the quarter. Subsidized rural passings grew by 127,000 in the second quarter and by 487,000 over the last 12 months, which is in addition to our continued nonrural construction and fill-in activity. Moving to second quarter revenue results on Slide 8. Over the last year, residential customers declined by 1.8%. Residential revenue per customer relationship declined by 1.8% year-over-year, but was essentially flat when excluding the programmer app allocation headwind of $251 million this quarter versus $67 million in the prior year period. There were other puts and takes, including pricing and packaging mix within our customer base and a decline in video customers during the last year, offset by the growth of Spectrum Mobile lines. As Slide 8 shows, in total, residential revenue declined by 3.5% and was down by 1.8% when excluding costs allocated to streaming apps and netted within video revenue in both periods. From a pure Internet revenue perspective, we are balancing rate actions in an inflationary environment and retention activities, where our more aggressive retention offers in the first quarter largely normalized over the course of 2Q. As Chris mentioned, we are making some pricing adjustments, which also include meaningful speed upgrades for the vast majority of affected customers. Those adjustments didn't impact 2Q, but will drive better residential revenue in the back half of the year. Turning to commercial. Total commercial revenue grew by 1.5% year-over-year, with mid-market and large business revenue growth of 2.8%. And when excluding all wholesale revenue, mid-market and large business revenue grew by 3.5%. Small business revenue grew by 0.7%, reflecting year-over-year growth in revenue per small business customer of 1.5%, partly offset by year-over-year decline in small business customers of 0.8%. Second quarter advertising revenue grew by 12.3%, given higher political revenue year-over-year. Excluding political, advertising revenue declined 4.6% year-over-year. Other revenue grew by 7.1%, driven by higher mobile device sales, partly offset by a $45 million onetime benefit in the prior year period. In total, consolidated second quarter revenue was down by 1.7% year-over-year, but decreased 0.8% when excluding advertising revenue and programmer app allocation. Moving to operating expenses and adjusted EBITDA on Slide 9. In the second quarter, total operating expenses were virtually flat year-over-year. Programming costs declined by 9.7% due to $251 million of costs allocated to programmer streaming apps and netted within video revenue versus $67 million in the prior period, a higher mix of lighter video packages and a 0.8% decline in video customers year-over-year, partly offset by higher programming rates. Other cost of revenue increased by 11.3%, primarily driven by higher mobile device sales, mobile service direct costs and higher advertising sales costs given higher political revenue and a higher mix of third-party impressions. Cost to service customers, which combines field and technology operations and customer operations grew 1.4% year-over-year, primarily due to higher fuel and medical costs. Marketing and residential sales expense declined by 3.1% year-over-year due to lower marketing expenses from procurement initiatives, but our volume of impressions in our marketing activity generally was much higher year-over-year. Transition expenses related to the pending Cox transaction totaled $65 million in the quarter, driven by systems disentanglement from Cox Enterprises and systems integration with Cox Communications. Transition expenses have been coming in a bit higher than expected. Some of that is closing delay and some is from a change in the expected mix of operating costs versus capital expenditures. But we still expect the sum of our Cox transition costs and capital expenditures to be at or better than what we anticipated. Finally, other expense declined by 2.5%, primarily driven by lower professional service expense. Adjusted EBITDA declined by 4.3% year-over-year in the quarter and declined by 3.2% when excluding transition expenses. Currently, for the full year 2026, we expect standalone Charter EBITDA, excluding the impact of transition costs to decline around 1% year-over-year. The back half of this year will benefit from political advertising, cost pass-throughs and efficiency initiatives, and we're working on a number of additional initiatives to improve the full year trajectory. Turning to net income. We generated $1.3 billion of net income attributable to Charter shareholders in the second quarter, essentially flat with the prior year period with lower year-over-year adjusted EBITDA, offset by a gain on extinguishment of debt related to open market debt repurchases in 2Q '26, which I will discuss in a moment. Turning to Slide 10. Second quarter capital expenditures totaled $2.9 billion, virtually flat with last year's second quarter with lower line extension spending, offset by higher network evolution spend, which lands in upgrade rebuild spend. For standalone Charter, we continue to expect total 2026 capital expenditures to reach approximately $11.4 billion. And as we've said before, looking beyond 2026, we expect total capital spending in dollar terms to be on a meaningful downward trajectory. And after our evolution and expansion initiatives conclude, our run rate capital expenditures for standalone Charter would be below $8 billion per year. That reduction in capital expenditures on its own from approximately $12.1 billion over the last 12 months to less than $8 billion in 2028, is equivalent to over $30 of free cash flow per share based on our June 30 share count. If we take consensus, 2026 free cash flow for standalone Charter and substitute our expected 2028 CapEx for 2026 CapEx, our current stock price would imply a free cash flow multiple of a bit over 2x and a free cash flow yield of nearly 50%. Turning to second quarter free cash flow on Slide 12. Second quarter free cash totaled $1 billion, about $75 million lower than last year given lower EBITDA and a less favorable change in working capital, partly offset by lower cash paid for taxes. Turning to cash taxes. Second quarter cash taxes totaled $101 million. We continue to expect that our calendar year 2026 cash tax payments will total between $500 million and $800 million. We finished the second quarter with $94 billion in debt principal. The weighted average life of our debt is 11.7 years. Our weighted average cost of debt remains at an attractive 5.2% and our current run rate annualized cash interest totals $4.9 billion. During the quarter, we repurchased 4 million Charter shares totaling $838 million at an average price of $210 per share. As of the end of the second quarter, our ratio of net debt to last 12-month adjusted EBITDA was 4.18x and stood at 4.21x pro forma for the pending Liberty Broadband transaction. Cable industry growth has been pressured by the pace of new competition growth combined with a challenging housing growth and move environment. Those factors have reduced our customer and EBITDA growth and our trading multiple. We've always regularly evaluated our balance sheet to maintain our financial strength and strategic flexibility and to be responsive to our debt and equity holders. As a result, today, we are lowering our post-transaction leverage target to a flat 3.5x, which we expect to achieve with consistent progress along the way within 3 years of the close of the Cox and Liberty Broadband transactions. We've already begun executing a multi-pronged strategy to achieve that goal. During the second quarter, we repurchased over $1.2 billion of our own debt in the open market for $1 billion in cash, reducing our total leverage by capturing approximately $250 million of discount. We also plan to reduce our total debt through liability management. Last night, we announced the launch of a capped exchange offer, targeting $20 billion of par value of our investment grade rated debt that trades at a discount to par. Participating bondholders will receive new par bonds in applicable 12- or 15-year maturities and, in some cases, cash and equivalent value to the current discounted trading value of the exchanged bonds plus a premium. If successful, this exchange will reduce our total debt principal and accelerate deleveraging. As of the end of the third quarter, including the impact of the Cox and Liberty Broadband transactions and including the impact of our second quarter debt repurchases and assuming the success of the exchange offer announced yesterday evening, we expect our ratio of net debt to last 12-month adjusted EBITDA to be just above 3.9x. Paying down debt, including the opportunity to repay secured maturities as they come due, will be part of our effort to reach our long-term leverage target and we expect there to be continuing opportunities for liability management approaches to support deleveraging. Our leverage target is not aspirational. We have high confidence in the strength of our business and its ability to generate substantial cash flow to achieve our targets. Given the pending Cox closing and its financing, and our focus on liability management, we have paused our share repurchases through the end of the third quarter. We expect share repurchases to restart in the fourth quarter and we expect to be in a position to repurchase shares throughout the deleveraging process to 3.5x. We expect our deleveraging efforts to create value for all providers of capital, including shareholders and debt holders and we remain committed to maintaining an investment-grade rating on our secured debt. Before turning the call over to Q&A, I want to make a few comments regarding our pending Cox transaction and our reporting plans, some of which I mentioned last quarter. Our first post-close quarterly results, which we expect will be our third quarter results will reflect a full quarter for legacy Charter plus a stub period for legacy Cox. So year-over-year actual comparisons won't be helpful, but we intend to present Charter's quarterly trending schedule with pro forma data along the lines of what you receive today. Going forward, we will report similar customer PSU and revenue data for both legacy entities for several quarters following close, both separately and on a consolidated basis. We will not show expenses or capital expenditures by legacy entity. That's not possible given the shared nature of key large items like programming, overhead and significant centralized capital spend. We will also continue to report transition expense and capital related to the integration, and we'll provide updates on certain items, including estimates for the synergies we've realized so that you can better isolate the organic growth of the business. Our balance sheet and P&L will also be impacted by purchase accounting. Part of that will be fair market value step-up of Cox assets, reflecting the fair market value of the consideration we paid for Cox assets as of the closing date. Taken at today's Charter share price, the current implied transaction enterprise value for the Cox business is $27 billion, which is roughly 5x EBITDA on transaction EBITDA and a 4.4x multiple when including $800 million of transaction synergies, which we now view as conservative. As of the end of the second quarter and pro forma for the Cox and Liberty Broadband transactions, our net debt totaled approximately $110 billion and consisted of Legacy Charter net debt of approximately $93 billion. The net debt we are assuming from Liberty Broadband of about $1 billion, the approximately $4 billion of debt we will issue to fund our cash payment to Cox Enterprises, and legacy Cox principal of about $12 billion. Note that for balance sheet purposes, the Cox debt we will assume will be fair valued in an amount less than the face value based on current market prices. A few other items to keep in mind. After close and on a quarterly basis, we will expense a charge of approximately $103 million of preferred coupon for Cox's ownership of preferred partnership units. That charge will be reported in our P&L as part of net income attributable to noncontrolling interests, similar to how we reported the Advance/Newhouse preferred interest following our transactions in 2016. We will also have some below the EBITDA line charges, including additional transaction advisory expenses, which are contingent and payable at closing. We also expect restructuring and separation expenses through the integration process that will post below EBITDA as well. Interest expense will increase for the combined company, given the debt assumed from Cox, the new Charter debt issued for the cash portion of the purchase price and the accretion of the discount on assumed Cox debt. As I mentioned last quarter, our outstanding share count will increase as we issued the equivalent of just over 46 million Charter shares to Cox Enterprises, comprised of common and preferred partnership units, partly offset by a net Charter share reduction of about 4.7 million shares associated with the Liberty Broadband transaction. That 4.7 million figure is lower now than when we announced the Liberty Broadband transaction, primarily due to our ongoing share repurchases from Liberty Broadband. Based on our June 30 standalone share count at close and on an as-converted as-exchanged basis, we expect our total shares to be about 177 million. And with that, I'll turn it over to the operator for Q&A.”