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(4) Assets and Liabilities Measured at Fair Value
For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company does not have any recurring assets or liabilities measured at fair value that would be considered Level 3.
The Company’s assets and liabilities measured at fair value are as follows:
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December 31, 2024 |
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December 31, 2023 |
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Quoted prices |
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Significant |
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Quoted prices |
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Significant |
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in active |
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other |
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in active |
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other |
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markets for |
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observable |
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markets for |
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observable |
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identical assets |
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inputs |
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identical assets |
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inputs |
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Description |
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Total |
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(Level 1) |
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(Level 2) |
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Total |
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(Level 1) |
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(Level 2) |
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amounts in millions |
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Cash equivalents |
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$ |
89 |
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89 |
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— |
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78 |
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78 |
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— |
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Restricted cash equivalents |
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$ |
64 |
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64 |
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— |
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— |
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— |
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— |
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Exchangeable senior debentures |
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$ |
1,897 |
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— |
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1,897 |
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1,255 |
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— |
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1,255 |
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The Company’s exchangeable senior debentures are debt instruments with quoted market value prices that are not considered to be traded on “active markets,” as defined in GAAP, and are reported in the foregoing table as Level 2 fair value.
Other Financial Instruments
Other financial instruments not measured at fair value on a recurring basis include trade receivables, trade payables, accrued and other current liabilities, equity securities, current portion of long-term debt (with the exception of the 3.125% Debentures due 2053 and the 3.125% Debentures due 2054 (each as defined in note 7)). With the exception of long-term debt
and preferred stock, the carrying amount approximates fair value due to the short maturity of these instruments as reported on our consolidated balance sheets. The carrying value of the Margin Loan Facility, the Senior Credit Facility and the Wells Fargo Note Payable (each as defined in note 7) all bear interest at a variable rate and therefore are also considered to approximate fair value.
Realized and Unrealized Gains (Losses) on Financial Instruments
Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:
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Years ended December 31, |
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2024 |
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2023 |
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2022 |
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amounts in millions |
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Exchangeable senior debentures (1) |
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$ |
(108) |
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(106) |
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61 |
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Indemnification obligation (2) |
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— |
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5 |
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273 |
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Other (3) |
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(17) |
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— |
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— |
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$ |
(125) |
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(101) |
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334 |
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(1) |
The Company has elected to account for its exchangeable senior debentures using the fair value option. Changes in the fair value of the exchangeable senior debentures recognized in the consolidated statements of operations are primarily due to market factors driven by changes in the fair value of the underlying shares into which the debt is exchangeable. The Company isolates the portion of the unrealized gain (loss) attributable to the change in the instrument specific credit risk and recognizes such amount in other comprehensive income. The change in the fair value of the exchangeable senior debentures attributable to changes in the instrument specific credit risk before tax was a gain of $27 million, a gain of $55 million and a loss of $7 million for the years ended December 31, 2024, 2023 and 2022, respectively, net of the recognition of previously unrecognized gains and losses. During the year ended December 31, 2024, the Company recognized $9 million of previously unrecognized gains related to the retirement of a portion of the 3.125% Debentures due 2053. The cumulative change was a gain of $82 million as of December 31, 2024, net of the recognition of previously unrecognized gains and losses.
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(2) |
Pursuant to an indemnification agreement, Liberty Broadband agreed to indemnify Liberty Interactive LLC (“LI LLC”), a subsidiary of QVC Group, for certain payments made to holders of LI LLC’s 1.75% exchangeable debentures due 2046 (the "LI LLC 1.75% Exchangeable Debentures"). As of December 31, 2023, all remaining LI LLC 1.75% Exchangeable Debentures were either retired or exchanged.
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(3) |
For the year ended December 31, 2024, the Company recognized an impairment on an equity security.
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