Nasdaq: LBRDA, LBRDB, LBRDK

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1 January 30, 2015 Volume XLI, Issue I Liberty Broadband Corporation Nasdaq: LBRDA, LBRDB, LBRDK Dow Jones Indus: 17, S&P 500: 1, Russell 2000: 1, Trigger: No Index Component: NA Type of Situation: Spinoff, Business Value Price (LBRDA): $ Shares Outstanding (MM): 103 Fully Diluted (MM) (% Increase): 106 (3%) Average Daily Volume (MM): 0.7 Market Cap (MM): $ 4,697 Enterprise Value (MM): $ 5,070 Percentage Closely Held: John Malone 8% econ., 46% voting 52-Week High/Low: $ Trailing Twelve Months Price/Earnings: NM Price/Stated Book Value: 0.9x Long-Term Debt (MM): $ 320 Implied Upside to Estimate of Intrinsic Value: 71% Dividend: Payout Yield NA NA NA Net Revenue Per Share: 2014 $ NA 2013 $ NA 2012 $ NA 2011 $ NA Earnings Per Share: 2014 $ NA 2013 $ NA 2012 $ NA 2011 $ NA Fiscal Year Ends: Company Address: Telephone: CEO/President: December Liberty Boulevard Englewood, CO Gregory B. Maffei Clients of Boyar Asset Management, Inc. do not own shares of Liberty Broadband Corporation common stock. Analysts employed by Boyar s Intrinsic Value Research LLC own shares of Liberty Broadband Corporation common stock. Introduction Liberty Broadband Corporation ( Liberty Broadband, Liberty, Broadband, LBRD or the Company ) was spun out from Liberty Media in November LBRD primarily consists of a 26% stake in #4 U.S. cable systems operator Charter Communications ( Charter or CHTR ) currently valued at $4.4 billion. LBRD also holds over $600 million in net cash and liquid securities. Principally based on public market values, Liberty Broadband currently trades at a 9% discount to its net asset value. In our view, the discount is unwarranted given Liberty s best-in-class management team, led by legendary cable operator John Malone, and their long track record of unlocking shareholder value in similar situations. Crucially, we also view Charter as a compelling investment in its own right. Long under-managed due to onerous debt loads, since CEO Tom Rutledge s arrival in 2012 Charter has transformed its strategy and enhanced its competitive position. Charter has accelerated investment in its cable network and product offerings (more HD channels, faster Internet, superior user interface, etc.) while also refocusing on quality of customer service. To date, these results have rebuilt Charter s brand value and improved the rate of customer additions, and with the rollout of all-digital services in 2014 this is beginning to show up in higher revenue growth (8.0% Y/Y in 3Q 2014). Charter remains under-penetrated in its footprint and faces

2 above-average satellite and DSL competition, so the investment in its product should provide attractive longterm returns. However, to date this improvement is masked by higher operating expenses and capital expenditures that have temporarily impacted profitability and free cash flow. Charter is also refocusing on generating incremental value through M&A, especially since the arrival of Liberty Broadband. There are huge benefits of scale in the cable industry, and John Malone s leveraged return on equity investment philosophy plays perfectly in the current ultra-low interest rate environment. Most recently, after failing to buy Time Warner Cable (TWC) outright, in April 2014 Charter reached a series of agreements with Comcast in conjunction with Comcast s acquisition of TWC. If completed as currently drawn, New Charter s (refers to Charter pro forma for the proposed transactions) owned or managed customer base would nearly double while simultaneously consolidating its footprint into a more clustered Midwest/Mountain West region with a #1 position in 10 states. Charter would leapfrog into the position of #2 cable operator and #4 multichannel video programming distributor (MVPD) in the country. The agreements were struck at highly attractive multiples of 7.125x EV/EBITDA pre-synergies and would be immediately accretive to EBITDA margins by approximately 360 bps. Should the deals collapse due to regulatory objections to the Comcast-TWC merger, Charter could find itself back in an equally attractive (or more so) position as perhaps the lone bidder for all of Time Warner Cable. At ~9x 2015E EV/EBITDA, Charter s current valuation does not look overly compelling at first glance. However, this does not include deferred tax assets that we estimate have a present value of close to $2 billion. Nor does Charter s current valuation give credit for the pending transactions with Comcast. Projecting to 2015 and including the present value of NOLs and the equity stake Charter will receive in the GreatLand Connections spinoff (discussed later), this implies a forward multiple of only 7.6x 2015E EV/EBITDA for New Charter. Longer term, the synergies/financial impact of the transactions could be huge. Old Charter (in its current composition) is also operating at below-average EBITDA margins and unprecedented capital expenditure levels, both of which should improve sharply in the coming years. Assuming even modest improvement over the next 4 years, we project New Charter s free cash flow could accelerate from minimal levels today to close to $20/share. At 8x 2018E EV/EBITDA (in line with recent industry transactions), we estimate Charter s intrinsic value could exceed $250 per share over a 3-4 year time horizon. We view Liberty Broadband as a compelling vehicle for investing in Charter at a double discount to intrinsic value. Over the long term, we expect LBRD and Charter to be combined in a tax free merger that will eliminate the double discount. A combination of LBRD into Charter at our 2018E intrinsic value estimate implies 71% upside to intrinsic value for LBRDA shares over the next 3-4 years. With net cash on the balance sheet, Liberty Broadband could create additional value through capital deployment such as share repurchases or participating in cable M&A. Background Liberty Broadband was spun out from Liberty Media in November 2014 as an independent company (not a tracking stock). The split allowed Liberty to create a separate stock currency that represents a (virtually) pure play investment vehicle in the U.S. cable systems industry. This followed Liberty Media s $2.6 billion investment (at $95.50 per share) in May 2013 for a 27% stake in the #4 U.S. cable systems operator, Charter Communications. Liberty Broadband also received the right to nominate 4 directors to Charter s board. The investment represented a long delayed return to the U.S. cable distribution business for Liberty chairman and de facto controlling shareholder John Malone (8% economic and 46% voting stake in LBRD), the legendary Cable Cowboy who built Tele-Communications Inc. (TCI) into the second largest U.S. cable provider by subscribers before selling it to AT&T for $59 billion in Aided by a more favorable investor outlook toward the broadband Internet business as well as an ongoing push for consolidation in the industry, LBRD s investment in Charter has already produced a 58% return based on CHTR s current stock price. Prior to the separation, Liberty Media also attributed to Broadband its small stake in Time Warner Cable (2.4 million shares valued at $322 million), related hedges in the form of TWC call option liabilities, and TruePosition, a provider of mobile phone location services that is relatively immaterial to LBRD s bottom line (2013 EBITDA of $5.3 million). Following debt issuance and a recently-completed equity raise via a non-dilutive shareholder rights offering, Liberty Broadband also holds ~$370 million in net cash

3 Liberty Broadband Estimated Net Asset Value (Current Est.) CHTR current market value (inc. warrants) $ 4,358 50% discount to analyst estimates $ 149 TWC equity $ 322 TWC call option liability $ (56) Cash $ 67 Rights offering proceeds, net (est.) $ 678 Debt $ (320) Charter warrants exercised ( ) $ (51) Net Asset Value $ 5,147 Diluted Shares Outstanding: Class A 27.0 Class B 2.5 Class C 58.9 plus Rights Offering - Class C 17.3 Diluted Shares Outstanding LBRD Est. Net Asset Value per Share $ Current share price (LBRDA) $ Implied discount to NAV 8.7% As stated, we believe Charter Communications is an attractive, undervalued cable systems operator in its own right. Charter has come a long way from a Missouri-based cable operator that was built up through a spree of acquisitions in the 1990s that accelerated after Paul Allen took control in 1998 and culminated in a $3.5 billion IPO at the height of the telecom boom in For many years thereafter, the company struggled with excessive debt levels and under-invested in capital expenditures and systems integration, producing customer dissatisfaction and subscriber losses. This ultimately led Charter to enter Chapter 11 bankruptcy proceedings in March However, Charter s position has brightened noticeably in recent years following a reduction in debt and a new strategic direction under a new management team. Charter emerged from bankruptcy on November 30, 2009 and its private equity backers had essentially exited by 2013 after secondary offerings and the transaction with Liberty Media. In December 2011, highly regarded Cablevision COO Tom Rutledge departed to lead Charter Communications. Under Mr. Rutledge s leadership, Charter has accelerated its investment in upgrading its cable systems as well as improving its customer service. Rutledge has also focused on increasing Charter s scale through opportunistic acquisitions, beginning with the $1.6 billion acquisition of Bresnan/Optimum West in July 2013, which added 375k customers in four states. Today, Charter has 5.8 million unique residential customers. Liberty s assumption of a substantial minority equity stake as well as board representation has propelled Charter to accelerate its quest to gain scale. Most prominently, Charter, backed by Liberty, pursued a hostile takeover of larger peer Time Warner Cable (TWC) between June 2013 and January As the #2 cable operator with 10.8 million video subscribers, TWC would have nearly tripled Charter s scale if the merger were completed. However, TWC management resisted Charter s overtures, citing valuation as well as the hefty debt load required to finance the cash portion of a deal. Charter s third and final revised offer of approximately $ per share (roughly $82.50 cash and $50 in CHTR stock per share; 7.3x forward tax adjusted EBITDA) was rejected by TWC and was soon trumped by Comcast. In February 2014, Comcast offered to purchase TWC in an all-stock transaction that initially valued TWC equity at $45 billion or $159 per share. As the #1 cable operator with greater financing flexibility and greater synergy potential to bring to the negotiating table, Comcast s entry into the bidding process effectively ended Charter s pursuit of TWC. However, this still left room for Charter to participate in TWC/Comcast divestitures that are needed to facilitate regulatory approval for the merger. In April 2014, Comcast and Charter reached a series of agreements including asset swaps covering 1.5 million customers, Charter s acquisition of 1.5 million TWC subscribers, and a 33% stake for Charter in a new entity consisting of 2.5 million divested Comcast subs

4 Charter Business Description and Competitive Position Charter Communications is the fourth largest cable multiple-system operator (MSO) in the U.S. with ~3,300 local cable franchises in 12 regional market clusters (covering 29 states) that collectively pass 12.8 million homes and manage 5.8 million unique residential customer relationships as of September 30, These subscribers generate 11.2 million total primary service units (PSUs) including 4.2 million video, 4.7 million high speed Internet, and 2.4 million fixed line voice subscriptions. Charter averages 1.94 PSUs and $ in monthly revenue per residential customer (ARPU). Charter also has 380k commercial customers, primarily small and medium sized businesses (SMB). Charter Footprint and Customer Relationships (thousands, Sep. 30, 2014) Total Customer Key Market Area Relationships California 595 Carolinas 585 Central States 599 Alabama/Georgia 626 Michigan 644 Minnesota/Nebraska 346 Mountain States 384 New England 357 Northwest 499 Tennessee/Louisiana 530 Texas 193 Wisconsin 578 Footprint: Video passings 12,819 Internet passings 12,484 Voice passings 11,978 Customers: Residential customer relationships 5,768 Video customers 4,157 Internet customers 4,662 Voice customers 2,389 Residential PSUs 11,208 Commercial: Customer relationships 380 Commercial PSUs 605 Attractive Position with Leading Network We believe Charter s cable footprint is highly attractive from a competitive standpoint. Charter s network is primarily concentrated in smaller metro areas and suburban districts. Although the densest urban areas afford their own benefits to cable operators, they are also more inviting to competition. Charter s modest concentration in these areas means minimal competition with cable or fiber overbuilders like Verizon FiOS or Google Fiber. The Company estimates they have only 4% overlap with Verizon FiOS, and this should drop after the Comcast transactions (detailed later). Instead, Charter primarily competes against satellite providers for video subscriptions. Although satellite companies continue to be competitive from a price standpoint, they are at an increasingly important long-term disadvantage due to their lack of a high speed Internet offering. Charter s primary competition for Internet services is from traditional wireline telecom companies that offer inferior DSL or similar fiber-to-the-node (copper last mile) providers, principally AT&T s U-Verse (~30% overlap based on video service footprints). To further the company s Internet speed advantage, Charter has been investing heavily to upgrade its systems in recent years. As of September 30, 2014, 84% of customers have been transitioned to all-digital transmission of services, up from just 14% at the close of The transition was scheduled for completion by the end of The systems upgrade frees up bandwidth so Charter can offer additional video services (more HD channels) and faster Internet speeds. Charter has leveraged the upgrade to double minimum Internet speeds for customers to 60 Mbps at no extra charge. By comparison, most DSL and U-Verse Internet subscribers have download speeds between 3-12 Mbps, and premium tier U-Verse offerings max at 45 Mbps in most areas. Longer term, the transition to DOCSIS 3.1 technology should allow cable companies like Charter to continue to ramp up broadband speeds and maintain an advantage against copper. Improved Customer Service and Re-Branding Charter s brand value suffered serious damage between the period as the company struggled for years to manage an oversized debt load that led to an almost inevitable trip through bankruptcy court. The company underinvested in upgrading its cable network and cut corners in customer service and technical expenses during these years and even after bankruptcy while under the control of private equity firms. Charter regularly polled among the lowest customer satisfaction ratings in the industry. Charter has made great strides in undoing this damage and refocusing on customer satisfaction under Mr. Rutledge s leadership. This

5 has included in-sourcing call centers and investing in technical support staff as well as upgrading the company s cable plant. Customer satisfaction rates have improved markedly as a result. Following the playbook he used at Cablevision (introducing the Optimum brand after repairing Cablevision s service quality), Rutledge introduced the Spectrum brand in 2014 to capitalize on the company s improved customer service and shed the lingering stigma attached to the Charter brand. The Spectrum brand is being rolled out market-by-market in step with the introduction of all-digital services. Top Quality Management at Charter and Liberty Broadband An important component of the investment thesis in LBRD/Charter is the best-in-class management teams at both entities. As noted, Charter CEO Tom Rutledge (age 60) is widely regarded as the top manager in the cable industry. Prior to joining Charter, he led Cablevision between where he produced record cable penetration rates and helped popularize the triple play package. Liberty Broadband CEO Greg Maffei (age 54) also has a prior history in the cable industry and has built an impressive record as CEO and/or chairman across Liberty Interactive, Liberty Media, and various spinoffs or investment targets since joining Liberty in And of course, Liberty Broadband Chairman John Malone s cable industry record stands on its own. He also has an impeccable track record of capital allocation and opportunistic, tax efficient monetization across the Liberty entities, which should be important long-term if Broadband is eventually sold or merged into Charter. At a sprightly 73, Dr. Malone is likely to remain at the helm for many years to come. If this is not enough comfort, we would also note that each of the above managers is highly incentivized to create long-term shareholder value. John Malone continues to hold a ~8% economic interest in Liberty. Greg Maffei also holds a ~1% stake in LBRD. In association with the spinoff and his appointment as CEO of Liberty Broadband, Greg Maffei was granted an additional 1.5 million options (10 year options struck at $48.10/share with 4-5 year vesting periods) in December Tom Rutledge is also closely aligned with shareholders at Charter, with stock and long-term options that translate to close to a 1% stake in the company. Comcast/TWC Transactions are Transformational for Charter Although Charter lost out on the bidding for Time Warner Cable (pending completion of the TWC/Comcast merger), the company still salvaged a major consolation prize. On April 25, 2014, Comcast and Charter agreed to a series of asset sales, swaps, and divestitures. The agreements are contingent on and designed to facilitate regulatory approval for the TWC merger, as well as to consolidate the respective companies footprints to generate additional economies of scale. The details of the agreement are as follows: Asset Purchase: Charter will acquire TWC cable systems currently covering approximately 1.4 million TWC video subscribers at a preliminary estimated purchase price of $7.3 billion. Asset Swap: Charter will swap cable systems covering approximately 1.6 million video subscribers for TWC cable systems covering 1.5 million video subscribers. Spinoff and Merger: Comcast will spin off cable systems covering approximately 2.5 million current Comcast video subscribers located in 11 Midwestern and Southeastern states. Overall, the systems cover 6.3 million homes passed and generate 2.7 million unique residential customer relationships including 2.3 million Internet subscribers as well as 183k commercial customers. The spun-off entity will be incorporated as GreatLand Connections. In connection with the spinoff, Charter will acquire an estimated 33% equity stake in GreatLand in exchange for newly-issued Charter shares. Charter will also take over managerial responsibilities for GreatLand including network, field operations, customer service, and rebranding. Charter will designate three of nine directors to GreatLand, including Tom Rutledge (who will serve as Chairman) and Greg Maffei, and will also provide a slate of potential directors from which Comcast will choose 3 additional directors. Importantly, Charter was in a favorable position to negotiate terms for these transactions. Comcast is a forced seller of sorts given the regulatory concerns over the TWC merger. Furthermore, the divested assets are relatively immaterial to industry behemoth Comcast, while they will dramatically move the needle at Charter. Charter was the only clear logical buyer with the scale and financial flexibility to support these transactions. It could also be argued that Charter possessed at least some negotiating leverage in halting its proxy battle with TWC and avoiding a bidding war with Comcast for TWC. These factors are evidenced in the purchase price: all transactions will be completed at valuations of 7.125x 2014 EBITDA. By comparison, Comcast s agreement to buy TWC was initially valued at approximately 7.9x 2014E EBITDA. Overall, the TWC asset purchases and

6 swaps will cost Charter approximately $8.0 billion including fees based on the most recent projections. Charter s net leverage should rise modestly to ~5x EBITDA following the transactions, versus 4.6x currently. The GreatLand Connections investment will be dilutive to Charter shareholders, but the agreement calls for GreatLand to be spun with a targeted leverage ratio of 5x (minimum 2.5x) which will reduce Charter s equity dilution. Charter will also benefit from its shares higher relative valuation in the stock swap with GreatLand (CHTR shares currently trade at ~9x 2014E EBITDA, tax adjusted, versus the 7.125x valuation for GreatLand). At the current CHTR share price and projected GreatLand EBITDA and leverage (assumed 5x), Charter will issue an estimated 8.3 million shares to GreatLand (translating to $1.3 billion equity value for Charter s stake). This equates to a 7% stake in Charter for GreatLand shareholders. Finally, the GreatLand transaction will also create an attractive high margin revenue stream via the management agreement: GreatLand will reimburse Charter s day-to-day costs and pay Charter an incremental 4.25% annual management fee under a renewable management contract with an initial 3 year term. Old vs. New Charter Scale and Penetration (Pro Forma 2Q 2014) Greater Scale and Concentrated Footprint for New Charter If completed as planned, the Comcast agreements will add wholly-owned cable franchises covering 1.4 million video subscribers or a roughly 1/3 increase in Charter s customer base. However, the full effect should be far more transformational for New Charter. Including the GreatLand Communications business, the transactions will nearly double Charter s owned or managed subscriber count and position Charter as the dominant #2 cable operator in the U.S. with over 8 million video customers. It should also be noted that, assuming completion of the AT&T/DirecTV transaction, Charter will become the #4 overall MVPD in the U.S. This will significantly increase Charter s clout in negotiating programming rights with content providers. Cable, Video Markets are Consolidating (video subs, MM) Cable Market Share Cable Market Share - Pro Forma MVPD Market Share - Pro Forma Comcast 22.5 Comcast/TWC 29.5 Comcast/TWC 29.5 Time Warner Cable 10.8 Charter (owned/managed) 8.0 AT&T/DirecTV 26.1 Cox 4.3 Cox 4.3 Dish Network 14.0 Charter 4.2 Cablevision 2.8 Charter (owned/managed) 8.0 Cablevision 2.8 Bright House 2.5 Verizon 5.6 Bright House 2.5 Suddenlink 1.2 Suddenlink 1.2 Mediacom 0.9 Mediacom 0.9 Source: Company filings and Charter company presentation. Estimates based on 2Q14-4Q14 data where available

7 Perhaps more importantly than New Charter s sheer scale, these acquisitions combined with the asset swaps will reposition Charter s assets in a far more consolidated, contiguous footprint in fewer regions. Charter will exit regions where it lacked scale or faced competitive challenges like the West Coast, New England, the eastern seaboard and Texas. The company averages only 29% residential video penetration in markets that will be divested, versus 38% video penetration for the acquired TWC assets (does not include GreatLand). As illustrated below, the company will gain a stronger position concentrated in the Midwest and Mountain West states. Including GreatLand, New Charter will hold a #1 position statewide in 10 states. Charter will also further reduce its presence in competitive markets like Southern California; Verizon FiOS overlap is expected to drop below 1%. In addition to traditional benefits of concentration like customer service efficiencies, the moves will enable Charter to effectively use mass media for marketing purposes. Charter Footprint in 2014 New Charter Footprint After Asset Acquisitions and Swaps

8 Merger Approval Risk and Incremental M&A Outlook Charter s agreements with Comcast are contingent upon the broader TWC-Comcast merger, which poses meaningful regulatory risk. The Federal Communications Commission (FCC) is the most ominous hurdle to approval, although the Justice Department could also weigh in. The politically divided FCC has not given any strong indication of its leanings in the case, and Chairman Wheeler has promised a thorough evaluation. Charter in Win-Win Position re: TWC After multiple stoppages, the TWC-Comcast deal is now over 120 days into the FCC s informal 180-day time clock for evaluating the merger. While the companies are still publicly expressing expectations that the deal will close in early 2015, they recently extended the termination date of their agreement to August 12, TWC shares currently trade at an 11% discount to the implied deal value based on Comcast s current share price, implying a high degree of investor uncertainty over the outcome. We are not arbitrageurs at Asset Analysis Focus, and cannot offer any special insight into the likelihood of ultimate approval. That said, we would note that TWC and Comcast are not direct competitors with essentially zero footprint overlap; wireless telecom providers, over the top (OTT) video services, and technology companies like Google are increasingly viewed as new sources of competition; and additional concessions (like Comcast provided to complete the NBC Universal acquisition) could provide the FCC a palatable face saving compromise solution. For what it s worth, Liberty Chairman John Malone a far more knowledgeable cable industry insider than ourselves handicapped the chances of regulatory approval at 80% in a November 2014 interview. Liberty Broadband CEO Greg Maffei also recently noted in a January 2015 interview, My bet would be that all of those deals [TWC-Comcast and ATT- DirecTV, etc.] get done the set of regulations or restrictions around them will be the rub. More importantly, we believe Charter is in a win-win situation regardless of the outcome of the TWC- Comcast decision. Its approval will also mean a green light for the divestiture transactions that will nearly double Charter s scale, as detailed. On the other hand, if the TWC-Comcast merger were blocked, Charter would be in an ideal position to pounce. Charter CEO Rutledge and Liberty s John Malone and co. have not been shy in expressing their strong continued interest in TWC were the Comcast deal to unravel. With TWC shares trading only 3% above Charter s final proposal over 12 months ago, combined with the lack of alternative suitors and an abundance of short-term/arbitrage investors moving into TWC shares in the interim expecting a deal, it is not difficult to imagine Charter and TWC coming to terms next time around. It is unlikely that regulatory approval would be a major hurdle for a Charter-TWC merger given Charter s far smaller scale than Comcast (4.2 million video customers versus 22.5 million at Comcast). Additional M&A Outlook Assuming approval of the TWC merger, Comcast will not be in a position to pursue acquisitions for an extended period. On the other hand, Charter is unlikely to slow down its M&A activity post-twc resolution. As the clear #2 in the industry with the incremental financial backing of Liberty, Charter will be in the ideal position to lead additional industry consolidation. Smaller independent cable operators should be increasingly driven toward partners with more scale like Charter given challenges such as persistent double-digit programming cost inflation; burdensome cable systems capex demands driven by ever-increasing consumer data consumption; and keeping up with technology developments such as next-generation set-top-boxes and Internet or wirelessly delivered TV Everywhere solutions. It is impossible to predict the timeline for further consolidation, but one logical M&A partner could be Suddenlink (subsidiary of Cequel Communications), the prospective #6 cable company with 1.2 million video subs across a footprint that is relatively adjacent to Charter but with minimal existing overlap. WideOpenWest (WOW!), with 654k video subs across the Midwest and Southeast, is another logical candidate. Both companies are highly leveraged and controlled by private equity, which could make them amenable to a deal. Cable One, the pending cable spinoff from Graham Holdings with 694k residential customers, has a presence in mid-to-smaller markets in 19 states that would also fit nicely into Charter s footprint. Finally, we would not dismiss the possibility that Charter pursues a merger with a larger, closely-held entity like Cox Communications or Bright House Networks. Charter reportedly held M&A discussion with Cox Communications prior to the TWC announcement. If the TWC-Comcast transaction is given regulatory blessing, we would not dismiss the possibility that Charter and Cox explore a tie-up to keep pace. While Cox has publicly emphasized the company has no interest in a sale and that it would have major tax implications, we would note that matriarch Anne Cox Chambers is 95 years old and tax efficient deal structures could be pursued. Bright House may also have to exit its management agreement with TWC due to the Comcast merger, which could prompt discussions of a partnership with Charter

9 Suddenlink Footprint: Attractive Combination with Charter? Over the long term, a full merger between Charter and GreatLand Connections seems almost inevitable. Given their overlapping ownership and management, reaching an agreement should not be a challenge. The combination could also easily be pursued tax-free in an all-stock structure. A full merger will not happen in the near term, however. Charter is barred from increasing its investment in GreatLand until 2 years after the spinoff, and cannot increase its ownership beyond 49% over the first 4 years. More Investment Options for Liberty Broadband Liberty Broadband is also positioned to make incremental investments in the cable industry independently of Charter. Liberty was spun with an essentially unleveraged balance sheet, with $320 million in debt drawn on a $400 million margin loan and ~$60 million in TWC put option liabilities offset by ~$320 million in TWC stock and $67 million in cash. The Company completed a stock rights offering in January 2015 that raised $698 million (before fees/expenses) in additional cash. Overall, this leaves LBRD with over $600 million in estimated net cash and liquid securities today plus additional debt facility capacity. Given LBRD s current market cap of ~$5 billion, deployment of this available capital could have a meaningful impact on LBRD shares. The first and most obvious place LBRD may look to invest is directly into Charter Communications. Liberty signed a standstill agreement with Charter that bars LBRD from increasing its stake above 35% until January The Company cannot increase its stake above 40% thereafter, unless the standstill agreement is terminated by either party (which would void Liberty s right to designate directors to Charter s board). This still leaves ~$1.5 billion in available capacity to invest in Charter before 2016 at the current CHTR share price. We would also expect LBRD to reinvest in Charter to prevent dilution in the case of any M&A that involves issuance of Charter shares. In the case of GreatLand, assuming the stock swap is completed with 5x leverage at GreatLand, Charter will have to invest between $300-$400 million to maintain a 26% stake. LBRD could also provide M&A support to Charter beyond proportional equity investments in the case of large-scale M&A. This might include convertible/preferred stock investments, debt, or even direct equity co-investment alongside Charter in an acquisition target. Liberty Broadband could also repurchase its own shares if the current 9% discount to NAV persists or widens. This would effectively represent an investment in Charter at a discount, and Malone and co. have done this en masse to great effect in other Liberty entities over the years. For example, former parent Liberty Media has repurchased ~50% of its initial shares outstanding at ~1/3 the current share price since Finally, we would not dismiss the possibility that Liberty Broadband invests directly in the cable industry, independently of Charter. While LBRD would be expected to defer to Charter in pursuing additional cable acquisitions, this should not prevent LBRD from making minority investments or pursuing deals where Charter is unable or unwilling

10 GreatLand Connections is an obvious choice. LBRD is restricted from investing in GreatLand for 2 years, but can invest more freely thereafter (CHTR and LBRD cannot collectively control over 49% of GreatLand for 4 years). Industry Outlook Title II and other Regulations In November 2014, the Obama Administration released new suggestions for tighter regulation of Internet service providers (ISPs). They included proposing ISPs be re-classified as a Title II common carriers under the Communications Act, which would vastly expand the scope of regulatory powers over the providers. The announcement caught many investors and industry insiders off guard. However, the FCC is ultimately the principal agent in any regulatory changes barring Congressional actions. The FCC has also issued a Notice of Proposed Rulemaking and is expected to release, in February 2015, new Internet net neutrality rules that could limit ISPs ability to charge content suppliers. This could also include re-classifying broadband Internet as a Title II service. This would be a blow to the cable industry, and would likely negatively impact cable company shares in the short term. However, the most feared issue utility-like rate regulation appears highly unlikely. It has not been proposed by President Obama, and the more moderate FCC Chairman Tom Wheeler has expressed no interest in pursuing that option. The more likely medium-term impact of Title II regulation is stricter net neutrality rules and restrictions on peering and fast lane arrangements. Despite the headlines, this should not be a major issue for ISPs like Charter. Charter has essentially operated under net neutrality already, without receiving meaningful gating fees from content providers. Likewise, Comcast already signed similar consent decrees as part of its NBC Universal deal. WiFi and Wireless Competition A major long-term theme in the telecom industry may be the convergence of wireless and wired broadband companies. As wireless telecom companies invest in higher capacity LTE networks, this is creating (at least the perception of) intermodal competition for traditional cable/wired service providers. At the same time, cable companies are moving toward the mobile sector by investing in public WiFi hotspots. In our view, cable companies pose a greater threat to the wireless providers than vice versa. According to recent research from Frost and Sullivan, over 55% of mobile data will be offloaded to WiFi by Most data is still consumed in the home (primarily high bitrate video consumption) or work, and wired broadband holds long term speed/capacity advantages against wireless competitors. Wireless telecom faces spectrum constraints and expensive backhaul requirements to increase network capacity. On the other hand, cable companies have a relatively clear technological/investment path toward widespread offerings of up to 1 Gbps standard Internet speeds in the home looking ~5 years out. At the same time, ISPs continue to invest in public WiFi hotspots. If combined with wholesale access to telecom networks, this could eventually enable cable companies to offer quadruple play services that truly offer a functional mobile component that could even replace traditional mobile contracts for some users. OTT and Cord Cutting Witnessing the explosion of free or low-cost video content delivered through the Internet, pundits and investors alike have prognosticated the impeding death of cable for many years. Predictions of cable TV cord cutting gained a foundation in reality in recent years as industry-wide video subscribership numbers have declined through the economic recovery. Likewise, per capita television consumption is in decline after steadily climbing for decades. Predictions for unbundling of the traditional cable TV bundle and disintermediation of the traditional MVPDs have also gained steam as the list of OTT video providers has expanded from the likes of Netflix and Hulu to include unbundled, Internet delivered subscription offerings from major networks such as HBO, CBS, and Nickelodeon. Sony and Dish (Sling TV) have also announced virtual MVPDs or Internetdelivered cable bundles that are not tied to ISPs, and many more may be in the works. Without a doubt, cable TV is no longer a growth driver for cable MSOs. While drastic declines are unlikely, cable TV subscribership looks to be in a slow but steady march downward. However, we question whether this is a major headwind for high speed data providers, on net. The transition from traditional linear/simulcast TV to random access viewing over the Internet only drives demand for broadband capacity, which plays right into cable MSOs strengths. According to industry data and Sandvine research, ISPs are reporting average data consumption growth rates of 30%-40% per year, driven by video entertainment like Netflix. At the same time, wired Internet is still underpenetrated in the U.S. (~71% of households) and high

11 speed Internet penetration is still well under 50%. This provides cable companies with a dual tailwind of penetration gains and Internet ARPU growth. Internet services are also higher margin than video by eliminating programming costs. While it is difficult to derive separate margins for video versus Internet subscriptions in the cable industry given the prevalence of bundled services, we would note that programming costs total 53%-54% of reported video revenue for Charter and close to 50% of revenue for satellite companies which predominantly supply video services. It is too early to predict the impact to a cable MSO s profitability from a cord cutting customer who retains Internet services. But we suspect it could be roughly neutral to the bottom line or even translate to higher margin dollars long-term. For those households that want to continue to access a wide range of high quality TV programming, subscribing a la carte to individual networks and/or virtual MVPD services quickly becomes untenable price-wise versus a basic cable subscription. Broadband providers are increasingly experimenting with skinny stacks and new video bundles that give price-sensitive households more options instead of cutting the cord. Double or triple-play service bundles offer additional savings for customers that cannot be replicated by OTT services. Virtual MVPD services also tend to lack the DVR capacity of a cable TV subscription, while TV Everywhere services can replicate the multi-device, out-of-home viewing benefits of a virtual MVPD subscription. These factors should keep cable video subscriber losses from accelerating markedly in the years to come. Broadband Pricing A change in broadband pricing strategy could offer incremental upside for Charter and the cable industry over the long term. Usage based Internet pricing has not gained widespread popularity in the U.S. cable industry to date. At Charter, CEO Rutledge has navigated the Company s strategy toward share gain over usage-based pricing and bandwidth caps. However, over the long term, this could be an attractive source of incremental revenue. Usage based pricing could be a win-win for the industry and regulators by increasing access and lowering cable bills for the majority/lower income strata, while boosting total revenue for ISPs by properly charging the very high users that currently tax the network without repercussion. According to Sandvine research, the top 1% of Internet users in North America account for 47% of all upstream traffic and 12% of downstream data consumption. The cable industry s trade group (NCTA) has been promoting usage based pricing, and even the recently-appointed FCC Chief Economist Steven Wildman is a leading proponent of the benefits of usage based pricing in increasing affordability and accessibility. Charter Growth Prospects and Financial Outlook Looking forward, we believe Charter is in a favorable position to grow at above industry average rates. The company is making rapid gains in its Internet business. Internet penetration reached 39.7% of residential passings in 3Q14, up by 330 bps Y/Y and by 570 bps versus 2 years ago. Yet Charter s Internet business remains relatively underpenetrated in its existing footprint, particularly considering the high mix of satellite/dsl and minimal fiber competition in its footprint. CEO Rutledge has discussed the 60%-plus penetration rates Cablevision achieved under his leadership as feasible long-term targets. Charter s residential video penetration (33.5%) is also the lowest among all its major cable peers (36.1% at TWC, 41.1% at Comcast, 53.6% at Cablevision), which still reflects the legacy impact of heavy customer losses in the years surrounding the company s bankruptcy and the company s inferior product until the recent upgrades. Charter s video penetration was as high as 47% in the timeframe. The video business should see similar benefits as the Internet business from the high concentration of satellite TV customers in Charter s footprint. The residential video business has already shown signs of relative stabilization more recently, with penetration down a modest 50 bps Y/Y and revenue actually up 5.9% in 3Q (Note: Charter recently re-allocated a higher percentage of bundled pricing from voice to video services, which explains much of the revenue growth.) Charter Residential Penetration and Monthly ARPU Residential Penetration: 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Video Penetration 36.7% 36.1% 35.5% 35.0% 34.7% 34.2% 34.0% 33.9% 34.0% 33.7% 33.5% Internet Penetration 33.0% 33.3% 34.0% 34.4% 35.2% 35.6% 36.4% 37.2% 38.4% 38.9% 39.7% Voice Penetration 18.0% 18.0% 18.5% 18.6% 19.1% 19.6% 19.9% 20.3% 20.7% 21.1% 21.4% Residential ARPU $ $ $ $ $ $ $ $ $ $ $

12 Overall, Charter posted moderate organic revenue growth in its residential business of 4.2% in 2012 and 5.0% in 2013, but showed minimal ARPU growth. This has improved in 2014, with residential revenue accelerating 8.0% Y/Y in 3Q14 despite still modest 2.0% ARPU growth. Going forward, this trend toward higher revenue growth should continue as the recent completion of its all-digital transition, and associated higher network capacity/broadband speeds will position the Company to implement price increases and up-sell higher tier Internet packages. Charter is also seeing higher growth rates in its residential voice and B2B services, both of which remain very underpenetrated but are growing customer relationships at a 6%-8% annual rate or faster. From a profitability perspective, Charter also has plenty of room for expansion. Charter s adjusted EBITDA margins of 34%-35% (35.0% in 2013, 34.2% in 3Q14) are well below large cable company peer averages of closer to 40%. In large part, we believe this reflects Charter s high customer service costs following the recent investments to improve customer satisfaction. Customer service costs increased 12% to $1.6 billion or 19.1% of revenue (up ~60 bps) in Customer service expense growth has slowed to 4.1% in 3Q14, but this expense line is still bloated. Although the line items do not perfectly match, we would note that TWC recorded customer care costs of 10.4% of revenue in 2014 and Comcast s technical and customer service expenses were 17.6% of cable segment revenue YTD 3Q14. Charter s costs should moderate further going forward given the gains the Company has already made in customer service. Margins should also improve over time due to the aforementioned shift toward higher margin Internet services and price increases, which have been delayed. As detailed in the following section, free cash flow is poised to see even greater benefits going forward as capex moderates from elevated levels. Charter Historical Financials ($MM, Pro Forma for Bresnan Acquisition) It should also be emphasized that, in part, Charter s outsized expense lines also reflect Charter s less dense footprint compared to TWC or Comcast. The pending asset acquisitions/swaps should provide a real benefit in terms of efficiency of customer service as well as marketing spending given the transformative change it will have on Charter s concentration. It is too early to project the exact impact of the TWC-Comcast transactions, assuming they are completed. But Charter has disclosed pro forma 1H 2014 financials indicating adjusted EBITDA margin improvement of a whopping 360 bps, as broken out in the following table. Even backing out the GreatLand management fee, pro forma EBITDA margins would improve 250 bps. However, we would not expect to see the full benefit of the margin differential between the acquired and disposed assets for at least 2-3 years after completing the deals. Most of the TWC systems being acquired have been relatively

13 under-invested and have not completed a transition to an all-digital plant (Mr. Rutledge recently estimated ~80% of systems are still analog). Charter plans to follow the same playbook implemented on its own assets over the past 2 years, upgrading the network then rolling out the Spectrum brand and marketing higher performance, higher priced bundles. This should also be the strategy at GreatLand, which will be managed by Charter and will utilize the Spectrum brand where Charter deems fit. This will mean elevated investment in the early years, but should produce attractive returns in the out years. Old vs. New Charter: Pro Forma 1H 2014 Financials ($MM) Existing Charter - Divestitures + GreatLand Former TWC Assets + Management Fee = New Charter Total Revenues 4,461 1,658 2, ,647 Adj. EBITDA 1, , ,181 margin 35.0% 32.9% 38.8% 100% 38.6% Capital Expenditures 1, ,016 % revenue 24.9% 21.7% 9.7% 0.0% 18.0% Adj. EBITDA - Capex ,165 margin 10.2% 11.2% 29.1% 20.6% Balance Sheet & Free Cash Flow From both a balance sheet and cash flow perspective, Charter has much more to offer investors than may be apparent on a cursory look. Charter s balance sheet is relatively highly leveraged with $14.4 billion debt or 4.6x EBITDA. Charter has secured another $8.4 billion in financing (including $3.5 billion in senior notes due 2022 and 2024) to cover the cost of the Comcast transactions, which will moderately increase net leverage to ~5x. This is at the high end of management s targeted leverage range of 4.0x-4.5x EBITDA, plus or minus half a turn. Nonetheless it still appears very manageable. Charter has capitalized on the low interest rate environment to extend its debt maturity profile while simultaneously lowering its average cost of debt. Charter s debt has a weighted average life of nearly 7 years with 91% of current debt outstanding due after 2017, and an attractive weighted average cost of debt for a highly leveraged company, at 5.6%. We project 2015E (EBITDA-capex) to interest coverage is still a comfortable 2.4x. Charter also has huge deferred tax assets, much of which is not reflected on the balance sheet. Charter held $8.3 billion (gross value) in net operating loss carryforwards (NOLs) as of the start of 2014, equaling a $2.9 billion deferred tax asset at the current tax rates (prior to present value discounting). Charter also benefits from stepped-up tax bases on acquired assets, with a $10.3 billion tax basis on its assets. The company expects these assets to shield nearly all cash income taxes through at least From a recent free cash flow perspective, Charter leaves much to be desired. Free cash flow declined from a high of $702 million in 2010 to $409 million (close to $4 per share) in 2013 and only $82 million YTD 3Q14. In addition to the company s debt load and below-average EBITDA margins as discussed, this reflects extremely elevated capital expenditure levels. Pro forma to include the Bresnan acquisition in all periods, Charter s capital expenditures totaled $1.8 billion or 22.7% of revenue in 2012 and $1.9 billion (22.0% of revenue) in Capex has increased by a massive 30% YTD to $1.7 billion (24.9% of revenue) and is expected to total ~$2.2 billion or 25% of revenue for the full year. This is far above the spending rate of any of its peers, as illustrated below. By comparison, TWC spent 18.0% of revenue on capex in 2014 and 14.5% in 2013; Comcast and Cablevision each spent 13% of cable segment revenue on capex YTD 3Q14. Other smaller cable peers average between 15%-20% of revenue on capital expenditures

14 Cable Industry Capital Expenditure Comparison (% Revenue) Company % Rev. Period Comcast (cable segment) 13.0% YTD 3Q14 Time Warner Cable 18.0% FY 2014 Cablevision 13.0% YTD 3Q14 Suddenlink 17.5% TTM 3Q14 WideOpenWest 19.4% YTD 3Q14 Cable One 20.0% FY 2013 Average 16.8% Charter 24.9% YTD 3Q14 Charter s elevated capex levels reflect the same factors already discussed: catch-up investments in customer service and upgrading the network. Of particular note, capex includes $427 million TTM spent on the all-digital transition spending that should substantially disappear going forward. Customer premise equipment (CPE) expenditures should also decline over time, as the Company already upgraded 2 million set top boxes (STB) since Charter received an FCC waiver in 2013 to develop a world box STB with a remote security module. This should reduce capex requirements for STB, modems, and WiFi as the world box is rolled out. Combined with moderating expenditures on support capital, Charter should see capex decline back to a high teens or lower percentage of revenue over the next few years. Given the tax shield, this should flow straight to the bottom line and could translate to ~$800 million per year ($7/share) in incremental free cash flow. In terms of the cable systems to be acquired from TWC/Comcast, this will extend the timeline for completing capex related to an all-digital transition. However, Charter does not expect the same level of investment in servicing, customer support, etc. on the acquired assets as Charter needed to put into its own business a couple years ago. Charter Capital Expenditures ($MM) Pro Forma CapEx: 1Q 2Q 3Q 4Q FY 1Q 2Q 3Q 4Q FY 1Q 2Q 3Q Customer Premise equipment Scalable Infrastructure Line extensions Upgrade/Rebuild Support Capital Total CapEx o/w All-digital transition o/w Commercial services Total CapEx, % Rev. 18.2% 24.2% 25.1% 22.9% 22.7% 20.7% 20.9% 20.1% 26.4% 22.0% 24.5% 25.2% 24.9% Valuation and Conclusion: Sum-of-the-Parts Discount has Widened Charter Communications shares have not been forgotten, by any stretch of the imagination. CHTR shares are already 58% above Liberty Broadband s (then Liberty Media) cost basis on its initial investment in May The return to investors has been equally impressive over the long term, with CHTR shares climbing well over 300% (33% CAGR) since emerging from bankruptcy at ~$35 per share in November How, one might ask, are Charter shares still attractive today? Charter shares long suffered from multiple overhangs including lingering effects of the bankruptcy, share overhang from Paul Allen and private equity owners looking for liquidity, a high debt load and historical underinvestment in its product, and general investor aversion to the cable sector due to the cord cutting risk. Further, the company continued to disappoint operationally until at least the timeframe and the arrival of Tom Rutledge as CEO. Despite the steady rise in share price, Charter shares still trade at a reasonable ~9.0x 2015E EV/EBITDA

15 Importantly, we believe the Company s current valuation still overlooks numerous hidden assets and positive longer-term factors. We estimate Charter s deferred tax assets have a present value of at least $2 billion ($18/share) using conservative assumptions. Nor does Charter s current valuation give credit for the pending transactions with Comcast, which are struck at a highly accretive multiple of 7.125x EV/EBITDA presynergies. While it is too early to precisely forecast the synergies/financial impact of the transactions, they could be huge. If completed as currently drawn, the deals will nearly double Charter s owned or managed footprint while simultaneously consolidating it by shedding more competitive/under-penetrated regions and creating a clustered Midwest/Mountain West footprint with a #1 position in 10 states. The transactions would also be immediately accretive to EBITDA margins by approximately 360 bps based on 1H 2014 results. Projecting to 2015 and including the present value of NOLs and the equity stake Charter will receive in the GreatLand Connections spinoff, this implies a forward multiple of only 7.6x 2015E EV/EBITDA for New Charter. Should the deals collapse due to regulatory objections to the Comcast-TWC merger, Charter could find itself back in an equally attractive (or more so) position as perhaps the lone bidder for Time Warner Cable. Operationally, the company has plenty of upside not reflected in historical financials or near-term earnings projections. Charter s strategy has improved tremendously since Mr. Rutledge s arrival, refocusing on building a long-term competitive advantage by reinvesting in its cable network and its brand/customer service. To date this has primarily translated into higher expenses, and the results are only just beginning to show in the top line as an all-digital network was phased in throughout the course of As expenses moderate going forward and revenue growth picks up, EBITDA margins could expand ~ bps just to reach competitors levels. At the same time, capital expenditures should decline bps or more as a percentage of revenue over the coming 2-3 years from historically elevated levels. Nonetheless in our base case scenarios, we assume revenue growth moderates from 7.5% currently to 6% over the next 3 years, while EBITDA margins expand less than 300 bps between 2014 and Conservatively projecting cash flow remains elevated at 18% of revenue on the legacy Charter assets as late as 2018, we project New Charter could still generate in excess of $2.4 billion in annual free cash flow ($19 per share) in 3-4 years. Recent Cable Industry Transactions Date Announced Target Acquirer Forward EV/EBITDA July 2012 Atlantic Cogeco 8.3x July 2012 Suddenlink Private Equity 8.0x February 2013 Bresnan Charter 8.0x April 2014 Time Warner Cable Comcast 7.9x Average: 8.1x In placing a value on Charter shares, we would highlight recent industry transactions have been completed at average forward EV/EBITDA multiples in excess of 8x. Most recently, Comcast valued Time Warner Cable at 7.9x 2014E EBITDA at the time of the offer in April In our view, Charter arguably deserves a premium valuation to the TWC deal and other recent transactions. Although Charter does not have the scale of TWC and its historical free cash flow profile is less compelling, this should reverse going forward as Charter is growing faster, is much further along its cable plant investment cycle, and faces weaker competition in its footprint. Nonetheless valuing Charter at a comparable 8x 2018E EBITDA, we estimate the company s intrinsic value could exceed $250/share, implying a 14%-19% IRR to our intrinsic value estimate over a 3-4 year time frame. Incremental upside could include synergies from a full integration of the TWC and GreatLand assets and the implementation of usage-based broadband pricing. Capital deployment whether into acquisitions or share repurchases could again be another catalyst looking out 2-3 years; we estimate Charter could de-lever to under 3x EBITDA by early 2018 barring any action in the interim, and the company would be in prime position to lead further industry consolidation going forward

16 Charter Communications est. Intrinsic Value ($MM) 2018E EBITDA: Old Charter - retained systems $ 2,613 Former TWC assets acquired $ 2,751 New Charter (ex. GreatLand fee) $ 5,364 EV/EBITDA multiple 8.0x Implied Enterprise Value $ 42,910 Net Debt $ (14,384) NOLs remaining, present value $ % Equity, 7.125x EBITDA* $ 2,561 New Charter Equity Value $ 31,700 Diluted shares outstanding CHTR 2018E intrinsic value per share $ 252 Current share price $ Implied IRR, 12/31/17 19% *Assumes no Charter management fee, which is also excluded in Charter EBITDA above Liberty Broadband shares currently trade at a 9% discount to net asset value principally based on the publicly ascribed value of its 26% stake in Charter. Given the discounted valuation on Charter shares as we have highlighted, we view Liberty Broadband as a compelling vehicle for investing in Charter at a double discount to intrinsic value. While some investors might be concerned that this discount will persist inevitably (or expand), history tells us that Liberty s astute management team will use the discount to the advantage of longterm Broadband shareholders. With net cash on the balance sheet, Liberty Broadband could create additional value through capital deployment such as engaging in immediately accretive share repurchases, participating alongside Charter in M&A, or even investing in GreatLand or other cable properties on its own. Longer term, a combination of LBRD and Charter that eliminates the discount in a tax-free transaction is in all likelihood a matter of when, not if. Without assuming any additional accretive capital deployment, a combination of LBRD into Charter at our 2018E intrinsic value estimate implies 71% upside to intrinsic value for LBRDA shares over the next 3-4 years. LBRDA Estimate of Intrinsic Value Charter $252/share $ 7,260 50% discount to analyst estimates $ 149 TWC equity (net of hedges) $ 266 Net Cash ( est.) $ 373 Implied Intrinsic Value $ 8,049 Diluted Shares Outstanding (all classes) per share $ Current share price (LBRDA) Implied upside to intrinsic value 71% Note: LBRD Class A shares (one vote per share) trade nearly on par ($0.07 per share premium) with non-voting Class C shares. While voting rights are unlikely to be of value anytime soon given John Malone s de facto controlling stake, at zero premium and fairly comparable liquidity we would prefer the rights

17 Risks Risks that Liberty Broadband may not achieve our estimate of the Company s intrinsic value include, but are not limited to, general economic weakness impacting the Company s businesses or investments; excessive price competition from other distributors at Charter; television programming cost inflation or failure to negotiate carriage arrangements; failure for Charter to complete the TWC-Comcast transactions; regulatory changes impacting cable industry dynamics; inability to generate expected synergies from integrating acquisitions; excessive balance sheet leverage limiting financial flexibility; and loss of key personnel. Analyst Certification Asset Analysis Focus certifies that the views expressed in this report accurately reflect the personal views of our analysts about the subject securities and issuers mentioned. We also certify that no part of our analysts compensation was, is, or will be, directly or indirectly, related to the specific views expressed in this report

18 LIBERTY BROADBAND CORPORATION CONDENSED COMBINED BALANCE SHEETS (unaudited, $ amounts in thousands) ASSETS Sept. 30, 2014 Dec. 31, 2013 Current assets: Cash and cash equivalents $ 47,411 $ 9,251 Trade and other receivables, net Deferred income tax assets 23,922 17,598 Derivative instruments 113,080 97,847 Note receivable from former parent 19,060 Other current assets 5,797 10,515 Total current assets 190, ,794 Investments in available-for-sale securities 340, ,700 Investments in affiliates, accounted for using the equity method 2,373,627 2,402,024 Property and equipment, net 3,775 4,660 Goodwill 45,600 20,669 Intangible assets subject to amortization, net 31, Deferred income tax assets 22,188 Other assets, at cost, net of accumulated amortization TOTAL ASSETS $ 3,008,304 $ 2,909,379 LIABILITIES AND EQUITY Current liabilities: Accounts payable and accrued liabilities $ 12,848 $ 9,335 Deferred revenue 21,329 3,260 Derivative instruments 64,984 54,600 Other current liabilities 10,034 2,912 Total current liabilities 109,195 70,107 Deferred revenue 37,617 35,740 Deferred income tax liabilities 24,338 TOTAL LIABILITIES 146, ,185 Equity Parent s investment 3,156,394 2,986,079 Accumulated other comprehensive earnings, net of taxes 7,674 7,890 Retained earnings (accumulated deficit) (302,576) (214,775) TOTAL EQUITY 2,861,492 2,779,194 TOTAL LIABILITIES AND EQUITY $ 3,008,304 $ 2,909,

19 Disclaimers Asset Analysis Focus is not an investment advisory bulletin, recommending the purchase or sale of any security. Rather it should be used as a guide in aiding the investment community to better understand the intrinsic worth of a corporation. The service is not intended to replace fundamental research, but should be used in conjunction with it. Additional information is available on request. The statistical and other information contained in this document has been obtained from official reports, current manuals and other sources which we believe reliable. While we cannot guarantee its entire accuracy or completeness, we believe it may be accepted as substantially correct. Boyar's Intrinsic Value Research LLC, its officers, directors and employees may at times have a position in any security mentioned herein. Boyar's Intrinsic Value Research LLC Copyright Copyright Boyar s Intrinsic Value Research LLC. All rights reserved