Annual report pursuant to Section 13 and 15(d)

Investments in Affiliates Accounted for Using the Equity Method

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Investments in Affiliates Accounted for Using the Equity Method
 12 Months Ended
Dec. 31, 2019
Equity Method Investments and Joint Ventures [Abstract]  
Investments in Affiliates Accounted for Using the Equity Method 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 December 31, 2019 and the carrying amount at December 31, 2018:
 
December 31, 2019
 
December 31, 2018
 
Percentage
ownership
 
Market
value
 
Carrying
amount
 
Carrying
amount
 
 
 
dollars in thousands
LendingTree (a)
26.5
%
 
$
1,045,044

 
$
166,465

 
174,002

Other
various

 
NA

 
1,178

 
3,028

 
 
 
 
 
$
167,643

 
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 December 31, 2019.

The Company’s share of LendingTree’s earnings (losses) was $(1.6) million, $21.1 million, and $7.0 million for the years ended December 31, 2019, 2018, and 2017, 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 $5.0 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 in 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 December 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 consolidated statements of operations. Summarized financial information for Liberty Broadband is as follows:
 
 
December 31,
 
 
2019
 
2018
 
 
amounts in thousands
Current assets
 
$
52,133

 
84,574

Investment in Charter, accounted for using the equity method
 
12,194,674

 
12,004,376

Other assets
 
9,535

 
9,487

Total assets
 
12,256,342

 
12,098,437

Long-term debt
 
572,944

 
522,928

Deferred income tax liabilities
 
999,757

 
965,829

Other liabilities
 
15,695

 
11,062

Equity
 
10,667,946

 
10,598,618

Total liabilities and shareholders' equity
 
$
12,256,342

 
12,098,437

 
 
Years ended December 31,
 
 
2019
 
2018
 
2017
 
 
amounts in thousands
Revenue
 
$
14,859

 
22,256

 
13,092

Operating expenses, net
 
(44,136
)
 
(34,270
)
 
(38,570
)
Operating income (loss)
 
(29,277
)
 
(12,014
)
 
(25,478
)
Share of earnings (losses) of affiliates
 
286,401

 
166,146

 
2,508,991

Gain (loss) on dilution of investment in affiliate
 
(79,329
)
 
(43,575
)
 
(17,872
)
Realized and unrealized gains (losses) on financial instruments, net
 
1,170

 
3,659

 
3,098

Other income (expense), net
 
(23,807
)
 
(22,339
)
 
(18,139
)
Income tax benefit (expense)
 
(37,942
)
 
(21,924
)
 
(416,933
)
Net earnings (loss)
 
$
117,216

 
69,953

 
2,033,667