Liberty Broadband Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Investments in Affiliates Accounted for Using the Equity Method

Investments in Affiliates Accounted for Using the Equity Method

3 Months Ended

Mar. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investments in Affiliates Accounted for Using the Equity Method

Investment in LendingTree

The Company has various investments accounted for using the equity method. The following table includes the Company’s carrying amount and percentage ownership of the more significant investments in affiliates at March 31, 2019 and the carrying amount at December 31, 2018:



	March 31, 2019						December 31, 2018
	Percentage ownership		Market value		Carrying amount		Carrying amount
			dollars in thousands
LendingTree (a)	26.9	%	$	1,210,769	$	171,116	174,002
Other	various		NA		1,859		3,028
					$	172,975	177,030

(a) Both the Company's ownership interest in LendingTree and the Company's share of LendingTree's earnings (losses) are reported on a three month lag. The market value disclosed is as of March 31, 2019.

The Company’s share of LendingTree’s losses was $2.1 million and $2.5 million for the three months ended March 31, 2019 and 2018, respectively.

Investment in Liberty Broadband

On May 18, 2016, Qurate Retail completed a $2.4 billion investment in Liberty Broadband Series C non-voting shares (for accounting purposes a related party of the Company) in connection with the merger of Charter and Time Warner Cable Inc. ("TWC"). The proceeds of this investment were used by Liberty Broadband to fund, in part, its acquisition of $5 billion of stock in the new public parent company, Charter, of the combined enterprises. Qurate Retail, along with third party investors, all of whom invested on the same terms as Qurate Retail, purchased newly issued shares of Liberty Broadband Series C common stock at a per share price of $56.23, which was determined based upon the fair value of Liberty Broadband’s net assets on a sum‑of‑the parts basis at the time the investment agreements were executed (May 2015). Qurate Retail, as part of the merger described above, exchanged, in a tax‑free transaction, its shares of TWC common stock for shares of Charter Class A common stock, on a one‑for‑one basis, and Qurate Retail granted to Liberty Broadband a proxy and a right of first refusal with respect to the shares of Charter Class A common stock held by Qurate Retail following the exchange, which proxy and right of first refusal was assigned to GCI Liberty in connection with the completion of the Transactions.

As of March 31, 2019, the Company has a 23.5% economic ownership interest in Liberty Broadband. Due to overlapping boards of directors and management, the Company has been deemed to have significant influence over Liberty Broadband for accounting purposes, even though the Company does not have any voting rights. The Company has elected to apply the fair value option for its investment in Liberty Broadband (Level 1) as it is believed that investors value this investment based on the trading price of Liberty Broadband. The Company recognizes changes in the fair value of its investment in Liberty Broadband in realized and unrealized gains (losses) on financial instruments, net in the accompanying condensed consolidated statements of operations. Summarized financial information for Liberty Broadband is as follows:



	March 31,		December 31,
	2019		2018
	amounts in thousands
Current assets	$	74,299	84,574
Investment in Charter, accounted for using the equity method	11,999,494		12,004,376
Other assets	9,585		9,487
Total assets	12,083,378		12,098,437
Long-term debt, including current portion	523,238		522,928
Deferred income tax liabilities	961,665		965,829
Other liabilities	8,720		11,062
Equity	10,589,755		10,598,618
Total liabilities and shareholders' equity	$	12,083,378	12,098,437



	Three months ended
	March 31,
	2019			2018
	amounts in thousands
Revenue	$	3,458		11,791
Operating expenses, net	(9,659		)	(9,545	)
Operating income (loss)	(6,201		)	2,246
Share of earnings (losses) of affiliates	34,849			9,302
Gain (loss) on dilution of investment in affiliate	(41,403		)	(26,757	)
Other income (expense), net	(6,120		)	(4,812	)
Income tax benefit (expense)	4,574			4,951
Net earnings (loss)	$	(14,301	)	(15,070	)