2. Cautionary Statement Regarding
Forward Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS:
This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, regarding, among other things, our plans, strategies and prospects, both business and financial. Although
we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you
that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and
assumptions including, without limitation, the factors described under quot;Risk Factorsquot; from time to time in our filings with the Securities and Exchange
Commission (“SEC”). Many of the forward-looking statements contained in this presentation may be identified by the use of forward-looking words such as
quot;believe,quot; quot;expect,quot; quot;anticipate,quot; quot;should,quot; quot;planned,quot; quot;will,quot; quot;may,quot; quot;intend,quot; quot;estimated,quot; quot;aim,quot; quot;on track,quot; quot;target,quot; quot;opportunity,quot; and quot;potential,quot; among
others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this presentation are set forth
in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:
• the availability, in general, of funds to meet interest payment obligations under our debt and to fund our operations and necessary capital
expenditures, either through cash flows from operating activities, further borrowings or other sources and, in particular, our ability to fund debt
obligations (by dividend, investment or otherwise) to the applicable obligor of such debt;
• our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a
default of our other obligations under cross-default provisions;
• our ability to pay or refinance debt prior to or when it becomes due and/or refinance that debt through new issuances, exchange offers or otherwise,
including restructuring our balance sheet and leverage position;
• the impact of competition from other distributors, including incumbent telephone companies, direct broadcast satellite operators, wireless broadband
providers, and digital subscriber line (“DSL”) providers;
• difficulties in growing, further introducing, and operating our telephone services, while adequately meeting customer expectations for the reliability of
voice services;
• our ability to adequately meet demand for installations and customer service;
• our ability to sustain and grow revenues and cash flows from operating activities by offering video, high-speed Internet, telephone and other services,
and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition;
• our ability to obtain programming at reasonable prices or to adequately raise prices to offset the effects of higher programming costs;
• general business conditions, economic uncertainty or slowdown, including the recent significant slowdown in the housing sector and overall
economy; and
• the effects of governmental regulation on our business.
All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We
are under no duty or obligation to update any of the forward-looking statements after the date of this presentation.
Unless otherwise stated, all results are pro forma, which reflect certain sales and acquisitions of cable systems in 2006, 2007, and 2008 as if they
had occurred on January 1, 2006. For comparable actual results for 2007, see the Appendix to these slides.
2
3. Executing on Priorities
8.9% revenue growth and 10.1% adjusted EBITDA1 growth
Deliver Solid Total ARPU up 12% - double-digit growth for over two years
Financial Growth Added 735,000 RGUs in the past year
50% bundle penetration up from 44% in year ago period
Results reflect scaling platform
Leverage
Telephone COGS per customer down 40%
Investments in
Increased productivity and improved service levels on all key fronts
Infrastructure Expanded EBITDA margin to 36.4% – up 40bp over prior year
Charter Business revenues increased 17% over prior year
Capture New
HD customers grew 55% year-over-year
Growth
VOD orders up nearly 60% from prior year
Opportunities Increased Internet speeds and plan to launch
DOCSIS 3.0 in 2H08
3
See notes on slide 12
4. Focus on Delivering Healthy Growth
RGUs Total ARPU
(Customers in thousands)
+12% y/y
+6% y/y $104
12,182
$98
11,780
11,447 $93
2Q07 4Q07 2Q08 2Q07 4Q07 2Q08
Revenue Adjusted EBITDA1
($ in millions) ($ in millions)
+8.9% y/y +10.1% y/y
$1,623 $591
$1,548 $563
$1,490 $537
2Q07 4Q07 2Q08 2Q07 4Q07 2Q08 4
See notes on slide 12
5. Growing Bundled Relationships
Bundled Customers
Bundle strategy focused on maximizing
(Customers in thousands) customer lifetime value
+11% y/y
Bundle penetration 50%, up from 44%
2,639
2,371 Triple play penetration 17%, up from 11% in
year ago period
Triple Play
Customers Successful migration of existing double play
customers to triple play
Strong triple play sell-in to new customers
Double Play Increased bundle penetration driving ARPU
Customers
growth
Triple play ARPU consistent at $125 - $130
2Q07 2Q08
Total y/y ARPU growth of 12% in 2Q
Bundle
Pen.
44% 50% Double-digit total ARPU growth for over two
years
3-Play
$125 - $130 $125 - $130
ARPU
Bundle continues to provide retention
benefits
Leveraging Bundle to Drive Performance
5
6. 2Q08 Financial Performance
2Q08 Highlights
Revenue Summary 2Q Y/Y YTD Y/Y
($ millions) 2Q08 Growth YTD 08 Growth Year-over-year revenue
growth of 8.9% driven by
Video $874 3% $1,732 3% balance of rate and volume
High-Speed Internet 339 10% 667 11%
Telephone 134 68% 255 78% ARPU increased 12% year-
Commercial 96 17% 189 16% over-year
Ad Sales 75 -- 143 4%
Telephone and HSI
Other 105 13% 201 12% contributed to 65% of revenue
growth
Total Revenues 1,623 8.9% $3,187 9.7%
Operating Costs and Charter Business continued
Expenses 1,032 8% 2,051 9%
strong revenue growth
1
Adj EBITDA $591 10.1% $1,136 10.3%
Margin up 40bp year-over-
Adj EBITDA Margin
1
36.4% 35.6% year from bundling and
productivity improvements
See notes on slide 12 6
7. Upselling Video Customers
Video Customer Mix
Success in moving customers to
premium video tiers
2Q08 Highlights
Basic Only Digital
33,900 digital net adds, up from 8,700 100%
in 2Q07
75%
Video ARPU up 6% year-over-year:
50%
55% increase in HD customers y/y
25%
30% increase in DVR customers y/y
0%
2Q06 2Q07 2Q08
Video ARPU
+6% y/y
Opportunities
$58.73
Leveraging the HD VOD platform
Initial deployment of switched digital $56.13
$55.59
planned for 2H08
Increasing digital and advanced
services penetration
2Q07 4Q07 2Q08
7
8. Growing HSI
HSI Customers
HSI revenue up 10% - performance (Customers in thousands)
+8% 2,787
2Q08 Highlights
driven by both rate and volume y/y
2,578
HSI customers up 8% year-over-year
while growing ARPU
80% of footprint has 16 Mbps available
Customers taking 10 Mbps or higher
2Q07 2Q08
nearly doubled sequentially
HSI
$40.14 $40.67 +1% y/y
ARPU
HSI Revenue
Opportunities
Continue to focus on speed tier upgrades
($ in millions)
Launched 1 Mbps HSI Lite service +10% $339
bundled with telephone y/y
$307
Expand home networking penetration
2Q07 2Q08
HSI revenue growth driven by bundle, speed migration, and home networking
8
9. Leveraging Telephone to Drive Growth
Telephone Customers
Telephone customers and revenue increased
(Customers in thousands)
nearly 70% y/y +68% 1,176
2Q08 Highlights
y/y
Telephone penetration reached 12% of homes
passed 701
75-80% of telephone customers in triple play
Realizing operating efficiencies as telephone
scales
2Q07 2Q08
Telephone COGS per customer down 40% y/y
Phone Pen
9% 12%
(mkt HH)
Telephone Revenue
Expect to reach 20-25% penetration in
Opportunities
next few years ($ in millions)
$134
+68%
Continue to refine offers to upsell existing y/y
customers and drive the bundle
Opportunity to penetrate non-video $80
households with HSI + telephone bundle
2Q07 2Q08
9
10. Charter Business
Charter Business revenue up 17%
2Q08 Highlights
Charter Business Bundle available across Charter Business Revenue
the entire residential phone footprint ($ in millions) +17%
y/y
$96
Commercial telephone customers have
nearly doubled year to date +12%
y/y
Strong bundle sell-in for new customers $82
$73
SME business spend ~$5.5B across
Opportunities
footprint; primarily targeting 2 - 12
telephone lines
Leverage existing sales force and 2Q06 2Q07 2Q08
infrastructure to drive growth
Successful referral campaign from
existing customers
10
11. 2Q08 Highlights
Solid Revenue 8.9% revenue growth
and Adj EBITDA 10.1% adjusted EBITDA1 growth
Growth1 36.4% adjusted EBITDA1 margin – up 40bp year over year
12% ARPU growth from bundling, upselling & advanced services
RGU net adds approx. 100K; total RGUs up 6% y/y
Balance
Migrating basic customers to digital platform
Rate and Volume
Leveraging HSI and telephone to drive bundle
50% bundle penetration, up from 44% in 2Q07
Disciplined Continue to expect $1.2B capex in 2008
Capital Three-quarters of capex was success-based
Investments
See notes on slide 12 11
12. Footnotes
Unless otherwise stated, all results are pro forma, which reflect certain sales and acquisitions of cable systems in 2006, 2007, and 2008 as if they
had occurred on January 1, 2006. For comparable actual results for 2007, see the Appendix to these slides.
1 Adjusted EBITDA and pro forma adjusted EBITDA are non-GAAP financial measures and should be considered in addition to, not as a
substitute for, net cash flows from operating activities reported in accordance with GAAP. These terms, as defined by Charter, may not be
comparable to similarly titled measures used by other companies. Adjusted EBITDA is defined as income from operations before
depreciation and amortization, stock compensation expense, and other operating expenses such as special charges or loss on sale or
retirement of assets. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-
intensive nature of the Company’s businesses as well as other non-cash or non-recurring items, and is unaffected by the Company’s capital
structure or investment activities. Adjusted EBITDA and pro forma adjusted EBITDA are liquidity measures used by Company management
and its board of directors to measure the Company’s ability to fund operations and its financing obligations. For this reason, it is a significant
component of Charter’s annual incentive compensation program. However, this measure is limited in that it does not reflect the periodic
costs of certain capitalized tangible and intangible assets used in generating revenues and the cash cost of financing for the Company.
Company management evaluates these costs through other financial measures.
The Company believes that adjusted EBITDA and pro forma adjusted EBITDA provide information useful to investors in assessing Charter’s
ability to service its debt, fund operations, and make additional investments with internally generated funds. In addition, adjusted EBITDA
generally correlates to the leverage ratio calculation under the Company’s credit facilities or outstanding notes to determine compliance with
the covenants contained in the facilities and notes (all such documents have been previously filed with the SEC). Adjusted EBITDA and pro
forma adjusted EBITDA, as presented, include management fee expenses in the amount of $32 and $34 million for each of the three months
ended June 30, 2008 and 2007, respectively, which expense amounts are excluded for the purposes of calculating compliance with leverage
covenants.
For a reconciliation of pro forma adjusted EBITDA and adjusted EBITDA to the most directly comparable GAAP financial measure, see the
Appendix.
12
14. CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(DOLLARS IN MILLIONS)
Three Months Ended June 30, Three months Ended December 31,
2008 2007 2007 2007 2007
Actual Actual Pro Forma (a) Actual Pro Forma (a)
Net cash flows from operating activities $ (36) $ (148) $ (151) $ - $ (2)
Less: Purchases of property, plant and equipment (316) (281) (281) (354) (354)
Less: Change in accrued expenses related to capital expenditures (10) (7) (7) 49 49
Free cash flow (362) (436) (439) (305) (307)
Interest on cash pay obligations (b) 460 452 452 457 457
Purchases of property, plant and equipment 316 281 281 354 354
Change in accrued expenses related to capital expenditures 10 7 7 (49) (49)
Other, net 25 18 18 7 7
Change in operating assets and liabilities 142 218 218 101 101
Adjusted EBITDA $ 591 $ 540 $ 537 $ 565 $ 563
(a) Pro forma results reflect certain sales and acquisitions of cable systems in 2007 as if they occurred as of January 1, 2007.
(b) Interest on cash pay obligations excludes accretion of original issue discounts on certain debt securities and amortization of deferred financing costs that are reflected as interest
expense in our consolidated statements of operations.
The above schedules are presented in order to reconcile adjusted EBITDA and free cash flows, both non-GAAP measures, to the most directly comparable GAAP measures in accordance
with Section 401(b) of the Sarbanes-Oxley Act.
