As filed with the Securities and Exchange Commission on March 31, 2025

Registration No. 333-     ​

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER
THE SECURITIES ACT OF 1933

GCI Liberty, Inc.

(Exact name of registrant as specified in its Charter)

12300 Liberty Blvd.
Englewood, Colorado 80112
(720) 875-5900

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive office)

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☒

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION DATED [      ], 2025

Preliminary Prospectus

GCI Liberty, Inc.

Series A GCI Group Common Stock

Series B GCI Group Common Stock

Series C GCI Group Common Stock

GCI Liberty, Inc., a Nevada corporation (the “Company,” “GCI Liberty,” “we,” “us” or “our”), is currently a wholly owned subsidiary of Liberty Broadband Corporation, a Delaware corporation (“Liberty Broadband”). GCI Liberty’s businesses, assets and liabilities will initially consist of 100% of the outstanding equity interests in GCI, LLC, a Delaware limited liability company (“GCI, LLC”), and its subsidiaries (the “GCI Business”). GCI, LLC, through its subsidiaries, provides a full range of data, wireless, video, voice, and managed services to residential customers, businesses, governmental entities, and educational and medical institutions primarily in Alaska under the GCI brand. Immediately following the separation, as described herein, GCI Liberty will be an independent publicly traded company, and Liberty Broadband will not retain any ownership interest in us.

This prospectus (“prospectus”) is being furnished to you as a holder of shares of common stock of Liberty Broadband in connection with the planned contribution of the GCI Business by Liberty Broadband to GCI Liberty and the divestiture of GCI Liberty pursuant to a distribution (the “distribution”) by Liberty Broadband to the holders of record of Liberty Broadband common stock (as defined below), as of the record date for the distribution, of all the shares of GCI Group common stock (as defined below) held by Liberty Broadband immediately prior to the distribution (collectively, the “separation”). As of immediately prior to the time of the distribution, Liberty Broadband will hold all outstanding shares of the common stock of GCI Liberty, and the only outstanding shares of common stock of GCI Liberty will be the GCI Group common stock. The separation is being effected as a condition to, and as part of a plan of reorganization, involving the Charter combination (as defined below).

At the time of the distribution, Liberty Broadband will distribute all the shares of GCI Group common stock held by Liberty Broadband to holders of record of Liberty Broadband common stock as of the record date for the distribution. If all conditions to the distribution are satisfied or, if permissible, waived, at 5:00 p.m., New York City time, on [       ], 2025 (as the same may be extended by the Liberty Broadband board of directors (the “Liberty Broadband board”)) (such date and time, the “distribution date”):

•

for each whole share of Liberty Broadband Series A common stock, par value $0.01 per share (the “Liberty Broadband Series A common stock” or “LBRDA”), held by you as of 5:00 p.m., New York City time, on [      ], 2025, the record date for the distribution (the “record date”), subject to the declaration of the dividend for the distribution, you will receive 0.20 of a share of Series A GCI Group common stock, par value $0.01 per share (the “Series A GCI Group common stock” or “GLIBA”);

​

•

for each whole share of Liberty Broadband Series B common stock, par value $0.01 per share (the “Liberty Broadband Series B common stock” or “LBRDB”), held by you as of the record date, subject to the declaration of the dividend for the distribution, you will receive 0.20 of a share of Series B GCI Group common stock, par value $0.01 per share (the “Series B GCI Group common stock” or “GLIBB”); and

​

•

for each whole share of Liberty Broadband Series C common stock, par value $0.01 per share (the “Liberty Broadband Series C common stock” or “LBRDK”, and together with the Liberty Broadband Series A common stock and Liberty Broadband Series B common stock, the “Liberty Broadband common stock”) held by you as of the record date, subject to the declaration of the dividend for the distribution, you will receive 0.20 of a share

​

of Series C GCI Group common stock, par value $0.01 per share (the “Series C GCI Group common stock” or “GLIBK”, and together with the Series A GCI Group common stock and the Series B GCI Group common stock, the “GCI Group common stock”).

No shares of GCI Liberty common stock are being distributed to holders of the Liberty Broadband Series A cumulative redeemable preferred stock, par value $0.01 per share (“Liberty Broadband preferred stock” or “LBRDP”). The distribution will be made in book-entry form by a distribution agent. Cash (with no interest) will be paid in lieu of fractional shares of GCI Group common stock. For U.S. federal income tax purposes, the distribution will generally be treated as a taxable transaction to Liberty Broadband and holders of Liberty Broadband common stock. For more information regarding the U.S. federal income tax considerations of the distribution, see “U.S. Federal Income Tax Considerations.” Based on the approximate numbers of shares of LBRDA, LBRDB and LBRDK outstanding as of [      ], 2025, we expect to distribute approximately [      ] million shares of GLIBA, [      ] million shares of GLIBB, and [      ] million shares of GLIBK to holders of existing shares of LBRDA, LBRDB and LBRDK, respectively, on the record date for the distribution. For information regarding the security ownership of certain beneficial owners and management, including John C. Malone, who is expected to serve as the Chairman of the board of directors of GCI Liberty and to beneficially own shares of GCI Group common stock representing approximately [      ]% of the voting power of the GCI Group common stock immediately following the separation, see “Security Ownership of Certain Beneficial Owners and Management.”

On November 12, 2024, Liberty Broadband entered into an Agreement and Plan of Merger (the “Charter merger agreement”) with Charter Communications, Inc., a Delaware corporation (“Charter”), and certain of its subsidiaries, whereby, subject to the terms thereof, Charter has agreed to acquire Liberty Broadband in an all-stock transaction (the “Charter combination”). Liberty Broadband and Charter are working to complete the Charter combination on June 30, 2027, unless terminated in accordance with the Charter merger agreement or otherwise agreed, and subject to adjustment to an earlier date in connection with certain tax law changes that may be proposed following the date of the Charter merger agreement, in each case, as set forth in the Charter merger agreement. The Charter combination is conditioned on, among other things, the completion of the separation. However, the separation is not conditioned on the completion of the Charter combination and, accordingly, the separation may occur even if the Charter merger agreement is terminated or the Charter combination will otherwise not be consummated. For more information, see “Certain Relationships and Related Party Transactions — Charter Combination.”

As part of the separation, and prior to the completion of the distribution, Liberty Broadband and its subsidiaries will complete an internal reorganization (the “internal reorganization”) in order for Liberty Broadband to transfer the GCI Business to GCI Liberty in exchange for GCI Liberty stock, including shares of GCI Liberty non-voting preferred stock, par value $0.01 per share (the “GCI Liberty non-voting preferred stock”), and the assumption of certain liabilities related to the GCI Business. As a part of the internal reorganization, and prior to the distribution, Liberty Broadband will sell all of the outstanding shares of GCI Liberty non-voting preferred stock to a third party for cash (the “preferred stock sale”). The internal reorganization will result in GCI Liberty owning, directly or indirectly, GCI, LLC and the operations comprising, and the entities that conduct, the GCI Business. The businesses and assets that will remain at Liberty Broadband following the separation will consist of the remainder of its businesses and assets not included in the internal reorganization and the distribution, including Liberty Broadband’s interest in Charter. For more information, see “The Separation — Internal Reorganization.” Following the internal reorganization and prior to the distribution, GCI Liberty will effect a reclassification of GCI Liberty’s existing common stock into a sufficient number of shares of Series A GCI Group common stock, Series B GCI Group common stock and Series C GCI Group common stock to complete the distribution. For more information, see “The Separation — Reclassification.” To accomplish the separation, Liberty Broadband will effect the distribution.

Until the distribution occurs, Liberty Broadband will own all of the outstanding common stock of GCI Liberty. Consequently, subject to Liberty Broadband’s agreement to consummate the distribution pursuant to, and subject to the terms and conditions of, the Charter merger agreement and the separation and distribution agreement (as defined below) (and subject to the satisfaction or, if permissible, waiver of the conditions to the distribution, including the preferred stock sale), Liberty Broadband will have the sole and absolute discretion to determine and change the terms of the separation (or to terminate the separation); provided, that, if the Charter merger agreement has not been terminated, such change or termination will require the prior written consent of Charter. Cash (with no interest) will be paid in lieu of fractional shares of GCI Group common stock.

The distribution will be effective as of the distribution date. Immediately after the distribution, GCI Liberty will be an independent publicly traded company. There is no current trading market for GCI Group common stock, although we expect that a limited market, commonly known as a “when-issued” trading market, will develop on or shortly before the record date for the distribution, and we expect “regular-way” trading of GCI Group common stock to begin on the first trading day after the distribution is completed. If you sell your shares of Liberty Broadband common stock in the “regular-way” market after the record date and on or before the distribution date, you also will be selling your right to receive shares of GCI Group common stock in connection with the distribution. The Series A GCI Group common stock and Series C GCI Group common stock are expected to be listed on the Nasdaq Global Select Market under the symbols “GLIBA” and “GLIBK,” respectively. The Series B GCI Group common stock is expected to be quoted on the OTC Markets under the symbol “GLIBB.” Following the

distribution, the number and series of shares of Liberty Broadband common stock you own will not change as a result of the distribution, and Liberty Broadband Series A common stock and Liberty Broadband Series C common stock will continue to trade on the Nasdaq Global Select Market under the symbol “LBRDA” and “LBRDK”, respectively, and Liberty Broadband Series B common stock will continue to be quoted on the OTC Markets under the symbol “LBRDB”, in each case, unless and until the Charter combination is consummated.

Holders of Liberty Broadband common stock are not required to vote on the separation, but you are urged to read this entire prospectus carefully. You are not being asked for a proxy and you are not required to send a proxy to Liberty Broadband. You do not need to pay any consideration, exchange or surrender your existing shares of Liberty Broadband common stock or take any other action to receive your shares of GCI Group common stock to the extent you are entitled to receive such shares. Please do not send in your Liberty Broadband stock certificates. Separately, a vote of holders of LBRDA, LBRDB and LBRDP was obtained to approve the adoption of the Charter merger agreement in connection with the Charter combination. Liberty Broadband had separately made available to holders of Liberty Broadband common stock and Liberty Broadband preferred stock a joint proxy statement/prospectus in connection with the vote and the issuance of shares of Charter capital stock in the Charter combination.

In reviewing this prospectus, you should carefully consider the matters described in the section titled “Risk Factors” beginning on page 20 of this prospectus.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This prospectus is not an offer to sell, or a solicitation of an offer to buy, any securities.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

The date of this prospectus is [           ], 2025

 

TABLE OF CONTENTS

Presentation of Information

Unless the context otherwise requires:

•

The information included in this prospectus about GCI Liberty, including the audited historical combined financial statements of GCI Liberty, which primarily comprise the assets and liabilities of GCI, LLC, a Delaware limited liability company (“GCI, LLC”), and its subsidiaries, assumes the completion of the separation (as defined below).

​

•

References in this prospectus to the “Company,” “GCI Liberty,” “we,” “us,” and “our” refer to GCI Liberty, Inc., a Nevada corporation, and its subsidiaries.

​

•

References in this prospectus to “Liberty Broadband” refer to Liberty Broadband Corporation, a Delaware corporation, and its consolidated subsidiaries, including GCI, LLC and GCI Liberty prior to completion of the separation.

​

•

References in this prospectus to the “GCI Business” refer to 100% of the outstanding equity interests in GCI, LLC and its subsidiaries.

​

•

References in this prospectus to the “separation” and to the “spin-off” refer to the various steps of the separation, including the internal reorganization (including the preferred stock sale), the reclassification and the distribution (each as separately defined herein), which will result in, among other things, GCI Liberty becoming an independent publicly traded company with its initial businesses, assets and liabilities consisting of the GCI Business.

​

•

References in this prospectus to the “distribution” refer to the divestiture of GCI Liberty pursuant to a distribution by Liberty Broadband to the holders of record of Liberty Broadband common stock (as defined herein) as of the record date for the distribution of all the shares of GCI Group common stock (as defined herein) held by Liberty Broadband as of the effective time of the distribution.

​

References in this prospectus to GCI Liberty’s historical assets, liabilities, products, businesses or activities generally refer to the historical assets, liabilities, products, businesses or activities of the GCI Business, as conducted through the subsidiaries of GCI, LLC, as the business was conducted as part of Liberty Broadband prior to the separation.

 

 

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This prospectus contains “forward-looking statements.” All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws. Words such as “believe,” “expect,” “anticipate,” “should,” “planned,” “will,” “may,” “intend,” “estimated,” “aim,” “on track,” “target,” “opportunity,” “tentative,” “positioning,” “designed,” “create,” “predict,” “project,” “initiatives,” “seek,” “would,” “could,” “continue,” “ongoing,” “upside,” “increases,” “grow,” “focused on” and “potential,” or the negative of such terms or other variations thereof, and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. These forward-looking statements include statements regarding the spin-off as well as the future financial and operating results, plans, objectives, expectations and intentions of GCI Liberty and Liberty Broadband. In addition to the risk factors described herein under the heading “Risk Factors”, the following are some but not all of the factors that could cause actual results or events to differ materially from those expressed or implied by such statements:

•

competition faced by us that may reduce our market share and financial performance;

​

•

customer demand for our products and services and our ability to adapt to changes in demand;

​

•

adverse economic conditions in the U.S. and inflationary pressures on input costs and labor;

​

•

changes in, or failure or inability to comply with, government regulations and legislation, including, without limitation, regulations of the Federal Communications Commission (the “FCC”), and adverse outcomes from regulatory proceedings and court cases;

​

•

our ability to obtain or maintain roaming services needed from other carriers;

​

•

our ability to stay abreast of new technology;

​

•

our ability to obtain necessary communications equipment from third-party vendors to meet customer needs;

​

•

natural or man-made disasters or terrorist attacks;

​

•

failure to protect the security of personal information about our customers, subjecting us to potentially costly government enforcement actions or private litigation and reputational damage;

​

•

our ability to obtain additional financing, or refinance or renew our existing indebtedness on acceptable terms;

​

•

the impact of our significant indebtedness;

​

•

our ability to generate cash to service our debt and to meet other obligations;

​

•

an active trading market for GCI Group common stock may not develop or be sustained;

​

•

the impact of events involving the assets and business market value of the GCI Group common stock;

​

•

the unfavorable outcome of pending or future legal proceedings;

​

•

the additional costs we will incur as a result of our separation;

​

•

Liberty Broadband and we may not realize the potential benefits from the spin-off in the near term or at all; and

​

•

the possibility that the spin-off may not occur, and, if it occurs, it may not occur on the terms described in this prospectus.

​

These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this prospectus, and Liberty Broadband and GCI Liberty expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in their expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based except to the extent necessary to amend and properly disseminate revised information in the event that the existing disclosure regarding the spin-off materially changes or as otherwise required by law or applicable rule or regulation. When considering such forward-looking statements, you should keep in mind the factors described in “Risk Factors” and other cautionary statements contained in this document. Such risk factors and statements describe circumstances which could cause actual results to differ materially from those contained in any forward-looking statement. Where, in any forward-looking statement, Liberty Broadband or GCI Liberty expresses an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but such statements necessarily involve risks and uncertainties and there can be no assurance that the expectation or belief will result or be achieved or accomplished.

 

i

 

​

1

 

2

 

​

3

 

​

4

 

​

5

 

​

6

 

​

7

 

8

 

9

 

​

10

 

​

11

 

12

 

13

 

14

 

​

15

 

​

16

 

​

17

 

18

 

​

​

​

December 31, 2024

​

​

December 31, 2023

​

​

​

​

amounts in millions

​

Summary Combined Balance Sheet Data:

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash and cash equivalents

​

​

​

$

74

​

​

​

​

​

79

​

​

Property and equipment, net

​

​

​

$

1,150

​

​

​

​

​

1,053

​

​

Intangible assets not subject to amortization

​

​

​

$

1,337

​

​

​

​

​

1,336

​

​

Total assets

​

​

​

$

3,382

​

​

​

​

​

3,331

​

​

Long-term debt, including current portion

​

​

​

$

1,069

​

​

​

​

​

1,021

​

​

Deferred income tax liabilities

​

​

​

$

359

​

​

​

​

​

349

​

​

Total liabilities

​

​

​

$

1,953

​

​

​

​

​

1,828

​

​

Total equity

​

​

​

$

1,414

​

​

​

​

​

1,483

​

​

​

​

​

Year ended

​

​

​

​

December 31, 2024

​

​

December 31, 2023

​

​

​

​

amounts in millions, except per share amounts

​

Summary Combined Statement of Operations Data:

​

​

​

​

​

​

​

​

​

​

​

​

​

Total revenue

​

​

​

$

1,016

​

​

​

​

​

981

​

​

Operating expense (exclusive of depreciation and amortization)

​

​

​

$

669

​

​

​

​

​

639

​

​

Depreciation and amortization

​

​

​

$

207

​

​

​

​

​

230

​

​

Operating income (loss)

​

​

​

$

140

​

​

​

​

​

112

​

​

Interest expense (including amortization of deferred loan fees)

​

​

​

$

(49)

​

​

​

​

​

(51)

​

​

Income tax benefit (expense)

​

​

​

$

(27)

​

​

​

​

​

(24)

​

​

Net earnings (loss)

​

​

​

$

70

​

​

​

​

​

41

​

​

Unaudited Pro Forma basic net earnings (loss) attributable to Series A, Series B and Series C GCI Liberty, Inc. shareholders per common share(1)

​

​

​

$

2.44

​

​

​

​

​

NA

​

​

​

19

 

RISK FACTORS

An investment in GCI Group common stock involves risks. You should consider carefully the risks described below together with all of the other information included in this prospectus in evaluating us and the GCI Group common stock. Any of the following risks, if realized, could have a material adverse effect on the value of GCI Group common stock. The risks described below and elsewhere in this prospectus are not the only ones that relate to our business or capitalization or the spin-off. The risks described below are considered to be the most material. However, there may be other unknown or unpredictable economic, business, competitive, regulatory or other factors that also could have material adverse effects on us or on an investment in GCI Group common stock. Past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. If any of the events below were to occur, our business, prospects, financial condition, results of operations and/or cash flows could be materially adversely affected. In any such case, the price of GCI Group common stock could decline, perhaps significantly. This prospectus contains forward-looking statements that contain risks and uncertainties. Please refer to the section entitled “Cautionary Statements Concerning Forward-Looking Statements” in connection with your consideration of the risk factors and other important factors that may affect future results described below. For purposes of these risk factors, unless the context otherwise indicates, we have assumed that the spin-off have been completed.

Factors Relating to Our Corporate History and the Spin-Off

The historical financial information included in this prospectus is not necessarily representative of our future financial position, future results of operations or future cash flows.

Investors should recognize that the historical financial information included in this prospectus has been extracted from Liberty Broadband’s historical consolidated financial statements and does not necessarily reflect what our results of operations, financial condition and cash flows would have been had we been a separate, standalone company pursuing independent strategies during the periods presented.

We will incur additional costs as a result of our separation from Liberty Broadband.

We will incur costs and expenses not previously incurred as a result of the spin-off. These increased costs and expenses may arise from various factors, including financial reporting, costs associated with complying with the federal securities laws (including compliance with the Sarbanes-Oxley Act), tax administration and human resources-related functions. Although Liberty Media will provide many of these services for us under the services agreement, neither we nor Liberty Media can assure you that the services agreement will continue or that these costs will not be material to our business.

Our inter-company agreements are being negotiated while we are still a subsidiary of Liberty Broadband.

We will enter into a number of inter-company agreements in connection with the completion of the spin-off, covering matters such as tax sharing and allocation of responsibility for certain liabilities previously undertaken by Liberty Broadband and/or Liberty Media. In addition, we will enter into the services agreement with Liberty Media pursuant to which Liberty Media will provide us with certain management, administrative, financial, treasury, accounting, tax, legal and other services, for which we will reimburse Liberty Media on a fixed fee basis. The terms of all of these agreements are being established while we are a wholly owned subsidiary of Liberty Broadband and we have overlapping officers and directors with Liberty Media, and, therefore, our agreements with Liberty Broadband and Liberty Media may not be the result of arms’ length negotiations. We believe that the terms of these inter-company agreements are and will be commercially reasonable and fair to all parties under the circumstances; however, conflicts could arise in the interpretation or any extension or renegotiation of the foregoing agreements after the spin-off is consummated. See “Certain Relationships and Related Party Transactions — Relationships between GCI Liberty and Liberty Broadband.”

The distribution may result in uncertain or adverse U.S. federal income tax consequences.

For U.S. federal income tax purposes, the distribution will not be eligible for treatment as a tax-deferred distribution by Liberty Broadband with respect to Liberty Broadband common stock. Accordingly,

 

20

 

the distribution will generally be treated as a taxable transaction to Liberty Broadband and holders of Liberty Broadband common stock. In connection with the internal reorganization and the distribution, Liberty Broadband and GCI Liberty have agreed to make certain elections to treat such transactions as resulting in deemed sales of, and a resulting “step-up” in the tax basis of, the assets of GCI Liberty’s subsidiaries (including GCI, LLC) for U.S. federal income tax purposes. For purposes of determining the U.S. federal income tax consequences of the internal reorganization and the distribution, Liberty Broadband and GCI Liberty have agreed to value the shares of GCI Group common stock distributed based on the volume-weighted average price of such stock over the first 20 trading days following the commencement of regular way trading.

It is possible, however, that the IRS could challenge the position taken by Liberty Broadband and GCI Liberty with respect to the valuation of GCI Group common stock distributed. This valuation is not binding on the IRS, and it is possible that the IRS could assert that the shares of GCI Group common stock distributed have a higher value than that resulting from the methodology agreed to by Liberty Broadband and GCI Liberty. In such case, Liberty Broadband and holders of Liberty Broadband common stock could be required to recognize more gain with respect to the distribution for U.S. federal income tax purposes.

Liberty Broadband and Charter intend to take the position that, for U.S. federal income tax purposes, the distribution and the Charter combination are, together, part of a single, integrated “plan of reorganization” within the meaning of the Code and applicable Treasury regulations, such that the GCI Group common stock received by holders of Liberty Broadband common stock is treated as taxable “boot” received by such holders pursuant to the plan of reorganization with respect to the Charter combination. This position is not dispositive with respect to the U.S. federal income tax treatment of the distribution, however, and there can be no assurance that the IRS will not assert (or that a court would not sustain) a contrary treatment. If the IRS were to disagree with the intended U.S. federal income tax treatment of the distribution, or if the Charter combination were not to occur, the distribution could be taxable as a dividend to holders of Liberty Broadband common stock for U.S. federal income tax purposes. Because the proper characterization of the distribution depends on subsequent events and may not be determinable at the time that the distribution occurs, applicable withholding agents may protectively withhold from the distribution as if it were a dividend for U.S. federal income tax purposes. Applicable withholding agents may satisfy any resulting withholding obligation by retaining and selling a portion of the shares of GCI Group common stock that would otherwise be distributed to non-U.S. holders of Liberty Broadband common stock in the distribution.

Moreover, even if the GCI Group common stock received by holders of Liberty Broadband common stock in the distribution is properly treated for U.S. federal income tax purposes as boot received by such holders pursuant to the plan of reorganization with respect to the Charter combination, the tax consequences of the distribution to a particular holder of Liberty Broadband common stock are expected to depend on facts and circumstances that may not be known to such holder at the time of the distribution, including whether such holder participates in the Charter combination and the total gain or loss realized in connection with the transaction.

It is also possible that the IRS could seek to challenge the validity of the deemed asset sale elections described above notwithstanding that the internal reorganization and the distribution will be taxable to Liberty Broadband. If any such challenge were successful, GCI Liberty may not be entitled to the anticipated step-up in tax basis or any resulting tax benefits. Additionally, to the extent GCI Liberty does obtain a tax basis step-up and ultimately realizes tax benefits in excess of those corresponding to a cash tax liability to Liberty Broadband of $420 million, GCI Liberty has agreed to pay over to Liberty Broadband the cash value of such excess benefits under a tax receivables agreement (as described further below).

Although Charter has agreed that it will be generally liable for taxes incurred by Liberty Broadband in connection with the internal reorganization and the distribution following the consummation of the Charter combination, Liberty Broadband will remain liable for such taxes prior to the Charter combination, and would remain liable for them indefinitely if the Charter combination were not to occur. Moreover, depending on the specific timing of the Charter combination, Liberty Broadband is expected to be required to pay such taxes prior to the consummation of such combination.

Holders of Liberty Broadband common stock should consult their tax advisors with respect to the particular tax consequences to them of the distribution, including the applicability and effect of any U.S.

 

21

 

federal, state and local tax laws, as well as foreign tax laws. For more information regarding the U.S. federal income tax considerations of the distribution, see “U.S. Federal Income Tax Considerations.”

We and/or Liberty Broadband may not realize the potential benefits from the spin-off in the near term or at all.

Liberty Broadband anticipates the realization of strategic and financial benefits to us and Liberty Broadband as a result of our separation from Liberty Broadband. See “The Separation — Reasons for the Separation.” In particular, the separation of GCI Liberty from Liberty Broadband is intended, among other things, to better position GCI Liberty to pursue opportunities for long-term growth and profitability unique to its own business and to enable it to more effectively implement its own distinct capital structure and capital allocation strategies. However, no assurance can be given that the market will react favorably to the spin-off or that any opportunities for long-term growth and profitability will become available following the spin-off on terms that GCI Liberty finds favorable or at all.

The Liberty Broadband board also considered a variety of risks, uncertainties and other potentially negative factors in its deliberations concerning the separation, including the following (which are not necessarily presented in order of relative importance): the risk of being unable to achieve the benefits expected from the separation; the potential disruption of the businesses of Liberty Broadband, including the GCI Business, as its management and employees devote time and resources to completing the separation; the substantial costs of effecting the separation; while the separation is expected to be completed, there is no assurance that all conditions to the parties’ obligations to complete the separation will be satisfied or, if permissible, waived, and as a result, it is possible that the separation might not be completed; the tax liabilities that will arise from the separation; and the various other applicable risks associated with Liberty Broadband and the separation.

We may not realize the benefits of acquisitions or other strategic investments and initiatives.

Our business strategy and that of our subsidiaries may include selective acquisitions, other strategic investments and initiatives that allow our subsidiaries to expand their business. The success of any acquisition depends upon effective integration and management of acquired businesses and assets into the acquirer’s operations, which is subject to risks and uncertainties, including the realization of the growth potential, any anticipated synergies and cost savings, the ability to retain and attract personnel, the diversion of management’s attention from other business concerns and undisclosed or potential legal liabilities of acquired businesses or assets.

Following the separation, our financial profile will change, and we will be a smaller, less diversified company than Liberty Broadband prior to the separation.

Following the separation, GCI Liberty will be a smaller, less diversified company than Liberty Broadband prior to the distribution. As a result, we may be more vulnerable to changing market conditions, which could have a material adverse effect on our business, financial condition and results of operations. In addition, the diversification of our costs, and cash flows will diminish as a standalone company, such that our results of operations, cash flows, working capital and financing requirements may be subject to increased volatility and our ability to fund capital expenditures and investments and service debt may be diminished.

The aggregate trading value of the Liberty Broadband common stock and the GCI Group common stock following the distribution may not be the same as the trading value of Liberty Broadband common stock had the separation not occurred.

As a result of the separation, it is expected that the trading price of shares of Liberty Broadband common stock immediately following the distribution will be different from the “regular-way” trading price of such shares immediately prior to the completion of the distribution because the trading price will no longer reflect the value of the GCI Business. There can be no assurance whether the aggregate trading value of the Liberty Broadband common stock and the GCI Group common stock following the distribution will be the same as, or higher or lower than, the trading value of Liberty Broadband common stock had the separation not occurred. This means, for example, (i) that the combined trading prices after the distribution

 

22

 

of 0.20 of a share of GLIBA and one share of LBRDA, may be equal to, greater than or less than the trading price of one share of LBRDA before the distribution, (ii) that the combined trading prices after the distribution of 0.20 of a share of GLIBB and one share of LBRDB may be equal to, greater than or less than the trading price of one share of LBRDB before the distribution, or (iii) that the combined trading prices after the distribution of 0.20 of a share of GLIBK and one share of LBRDK, may be equal to, greater than or less than the trading price of one share of LBRDK before the distribution.

We expect to have overlapping directors and officers with Liberty Broadband, Liberty Media, QVC Group and Liberty TripAdvisor which may lead to conflicting interests.

We expect that certain executive officers of Liberty Broadband, Liberty Media, QVC Group and Liberty TripAdvisor, Inc. (“Liberty TripAdvisor”) will also serve as our executive officers pursuant to the services agreement that will be entered into between us and Liberty Media in connection with the completion of the spin-off, and certain directors of Liberty Broadband and Liberty Media will also serve on our board of directors following the completion of the spin-off. Our executive officers and members of our board of directors have fiduciary duties to our stockholders. Likewise, any such persons who serve in similar capacities at Liberty Broadband, Liberty Media, QVC Group, Liberty TripAdvisor or any other public company, have fiduciary duties to that company’s stockholders. For example, there may be the potential for a conflict of interest when our Company, Liberty Broadband or Liberty Media pursues acquisitions and other business opportunities that may be suitable for each of them. Therefore, such persons may have conflicts of interest or the appearance of conflicts of interest with respect to matters involving or affecting more than one of the companies to which they owe fiduciary duties. Further, as allowed by Nevada law, our restated articles will renounce any interest or expectancy in certain business opportunities involving our directors and officers, which will allow such directors and officers to pursue those business opportunities without being liable to us or our stockholders arising out of any duty or obligation to permit the Company to pursue such opportunities. Each of Liberty Broadband and Liberty TripAdvisor has also renounced its rights to certain business opportunities and their respective restated certificates of incorporation provide that no director or officer of either company will be liable to their respective company or their stockholders by reason of the fact that any such individual directs a corporate opportunity to another person or entity instead of the respective company, or does not refer or communicate information regarding such corporate opportunity to our Company, unless (x) such opportunity was expressly offered to such person solely in his or her capacity as a director or officer of their respective company or as a director or officer of any of the respective company’s subsidiaries, and (y) such opportunity relates to a line of business in which their respective company or any of its subsidiaries is then directly engaged.

Moreover, immediately following the completion of the spin-off, our Chairman of the Board, [certain other directors] and our officers will continue to own Liberty Broadband common stock, RSUs and options to purchase Liberty Broadband common stock. These ownership interests could create, or appear to create, potential conflicts of interest when these individuals are faced with decisions that could have different implications for us or Liberty Broadband.

In addition, any potential conflict that qualifies as a “related party transaction” ​(as defined in Item 404 of Regulation S-K) is subject to review by the audit committee of our board or another independent body of our board designated to address such actual or potential conflicts. Any other potential conflicts that arise will be addressed on a case-by-case basis, keeping in mind the applicable fiduciary duties owed by the executive officers and directors of each issuer. From time to time, we may enter into transactions with Liberty Broadband, Liberty Media and/or their respective subsidiaries or other affiliates. There can be no assurance that the terms of any such transactions will be as favorable to us, Liberty Broadband, Liberty Media or any of their respective subsidiaries or affiliates, as would be the case where there is no overlapping officer or director.

The unfavorable outcome of pending or future legal proceedings could have a material adverse impact on the operations and financial condition of our business.

Our subsidiaries are parties to several legal proceedings arising out of various aspects of their businesses, including but not limited to the various matters related to the RHC Program described under “Business — Regulatory Matters — Data Services and Products — RHC Program”. The outcome of these

 

23

 

proceedings may not be favorable, and one or more unfavorable outcomes could have a material adverse impact on their respective financial conditions, which can impact our financial performance.

It is expected that Mr. Malone will own shares of GCI Group common stock representing approximately [      ]% of the aggregate voting power of our Company, which may be deemed to put him in a position to influence significant corporate actions and may discourage others from initiating a potential change of control transaction that may be beneficial to our stockholders.

As of [      ], Mr. Malone beneficially owned shares of Liberty Broadband common stock representing the power to direct approximately [      ]% of the aggregate voting power of the Liberty Broadband common stock and, immediately following the spin-off, Mr. Malone is expected to beneficially own shares of GCI Group common stock (assuming (i) the distribution of [      ] shares of Series A GCI Group common stock and [      ] shares of Series B GCI Group common stock based on [      ] shares of Liberty Broadband Series A common stock and [      ] shares of Liberty Broadband Series B common stock outstanding as of [      ] and (ii) that no shares of Liberty Broadband Series B common stock are converted into shares of Liberty Broadband Series A common stock prior to distribution) representing the power to direct approximately [      ] % of the aggregate voting power of GCI Group common stock subject to the Malone nonvoting side letter (as defined below). Therefore, it is expected that Mr. Malone will continue to be deemed to be in a position to influence significant corporate actions, including corporate transactions such as mergers, business combinations or dispositions of assets due to his ownership of GCI Group common stock. However, in connection with the contemplated separation, on December 31, 2024, Mr. Malone and certain anticipated holders of shares of GCI Group common stock affiliated with Mr. Malone (collectively, the “Malone GCI group”) entered into a side letter with GCI Liberty (the “Malone nonvoting side letter”) pursuant to which each member of the Malone GCI group irrevocably and unconditionally agreed that the members of the Malone GCI group, in the aggregate, will not vote any shares of GCI Liberty voting stock beneficially owned by the Malone GCI group that, if voted, would result in the aggregate voting power of the Malone GCI group exceeding the lesser of (a) 49.99% of the aggregate voting power in GCI Liberty and (b) the aggregate voting power of the Malone GCI group in Liberty Broadband, with the determination of the aggregate voting power of the Malone GCI group in Liberty Broadband being made as of immediately prior to the record date established by Liberty Broadband with respect to the distribution and without giving effect to the Malone exchange side letter. The Malone nonvoting side letter will automatically terminate upon the occurrence of certain events, including the receipt of the approval of transfer of control applications by the FCC and the RCA permitting the Malone GCI group to exercise de jure control of GCI Liberty. This concentration of ownership could discourage others from initiating any potential merger, takeover or other change of control transaction that may otherwise be beneficial to our stockholders.

The spin-off may not occur, and, if it occurs, it may not occur on the terms described in this prospectus, and the Liberty Broadband board may abandon the spin-off at any time prior to the declaration of the distribution, or otherwise decide to amend the terms of any agreement Liberty Broadband enters into relating to the spin-off.

No assurance can be given that the spin-off will occur, or, if it occurs, that it will occur on the terms described in this prospectus. In addition to the conditions to the spin-off described herein (certain of which may be waived by Liberty Broadband and, if the Charter merger agreement has not been terminated, Charter), subject to Liberty Broadband’s agreement to consummate the separation pursuant to, and subject to the terms and conditions of, the Charter merger agreement, Liberty Broadband may abandon the spin-off at any time prior to the declaration of the distribution for any reason or for no reason, provided, that, if the Charter merger agreement has not been terminated, such abandonment will require Charter’s prior written consent. Additionally, the agreements to be entered into by us with Liberty Broadband in connection with the spin-off (including the separation and distribution agreement, the tax sharing agreement and the tax receivables agreement) may be amended or modified prior to the consummation of the spin-off. If any condition to the spin-off is waived or if any material amendments or modifications are made to the terms of the spin-off or to such ancillary agreements prior to the spin-off, Liberty Broadband intends to promptly issue a press release and file a Current Report on Form 8-K informing the market of the substance of such waiver, amendment or modification.

 

24

 

We are a holding company, and we may be unable to obtain cash in amounts sufficient to service our financial obligations or meet our other commitments.

Our ability to meet our current and future financial obligations and other contractual commitments depends upon our ability to access cash. We are a holding company, and our sources of cash include our available cash balances, net cash from the operating activities and indebtedness of our wholly owned subsidiary GCI, LLC and proceeds from any asset sales or other forms of asset monetization we may undertake in the future. In addition, the ability of GCI, LLC to pay dividends or to make other payments or advances to us depends on its operating results and any statutory, regulatory or contractual restrictions to which it may be or may become subject. Some state regulators have imposed, and others may consider imposing, cash management practices on regulated companies, including us, that could limit the ability of such regulated companies to transfer cash between subsidiaries or to the parent company. While none of the existing state regulations materially affect our cash management, any changes to the existing regulations or imposition of new regulations or restrictions may materially adversely affect our ability to transfer cash within our consolidated companies.

Satisfaction by GCI Liberty of its indemnification obligations or the failure of Liberty Broadband or Charter to satisfy their indemnification obligations could have a material adverse effect on GCI Liberty’s financial conditions, results of operations and cash flows.

Pursuant to the separation and distribution agreement that GCI Liberty entered into with Liberty Broadband in connection with the spin-off of the GCI Business by Liberty Broadband, GCI Liberty has agreed to indemnify Liberty Broadband for all losses arising out of, resulting from or in connection with (i) the businesses, assets or liabilities contributed to GCI Liberty in the internal reorganization, (ii) any breach of, or failure to perform or comply with, any covenant, undertaking or obligation of GCI Liberty under the separation and distribution agreement or other agreements referenced therein and (iii) any untrue statement of material fact in (A) this registration statement or other disclosure document filed with the SEC in connection with the distribution (other than untrue statements of material fact made by Liberty Broadband or for which Liberty Broadband provided information in writing), or (B) Liberty Broadband’s disclosure documents filed with the SEC prior to the effective time of the distribution for which the applicable disclosure relates to any member of the Spinco group or for which Spinco group or its predecessors provided information in writing. Further, pursuant to the separation and distribution agreement, Liberty Broadband has agreed to indemnify GCI Liberty for all losses arising out of, resulting from or in connection with (i) the businesses, assets or liabilities retained by Liberty Broadband in the internal reorganization, (ii) any breach of, or failure to perform or comply with, any covenant, undertaking or obligation of Liberty Broadband under the separation and distribution agreement or other agreements referenced therein and (iii) any untrue statement of material fact in (A) this registration statement where such untrue statement of material fact is made by Liberty Broadband or for which Liberty Broadband provided information in writing or (B) Liberty Broadband’s disclosure documents filed with the SEC prior to the effective time of the distribution (other than untrue statements of material fact that arise out of disclosures relating to the Spinco group or for which Spinco group or its predecessors provided information in writing). At the completion of the Charter combination, in accordance with the Charter merger agreement, Charter will execute a joinder agreement to the separation and distribution agreement, pursuant to which, from and after the closing of the Charter combination, Charter will be directly responsible and liable for Liberty Broadband’s obligations under the separation and distribution agreement, including Liberty Broadband’s indemnification obligations. These indemnification obligations exclude any matters relating to taxes; however, under the tax sharing agreement and tax receivables agreement, GCI Liberty and Liberty Broadband (and after the closing of the Charter combination, Charter) will also have indemnification obligations to each other with respect to taxes, tax-related items and tax benefits allocated between them under these tax agreements. See “Certain Relationships and Related Party Transactions — Agreements Relating to the Spin-Off — Separation and Distribution Agreement,” “— Tax Sharing Agreement” and “— Tax Receivables Agreement” in this prospectus for more information. GCI Liberty could be negatively affected if it is required to make material payments pursuant to its indemnification obligations to Liberty Broadband.

The indemnity from Liberty Broadband may not be sufficient to protect GCI Liberty against the full amount of such liabilities if, for example, Liberty Broadband fails to fully satisfy its indemnification obligations. Moreover, even if GCI Liberty ultimately succeeds in recovering from Liberty Broadband any

 

25

 

amounts for which it is held liable, GCI Liberty may be temporarily required to bear those losses itself, requiring GCI Liberty to divert cash that would otherwise have been used in furtherance of its business operations. In addition, third parties could seek to hold GCI Liberty responsible for any of the liabilities that Liberty Broadband has agreed to retain. Each of these risks could have a material adverse effect on GCI Liberty’s financial conditions, results of operations and cash flows.

Factors Relating to the GCI Business

We refer to the business operations of the GCI Business as “GCI” in the following risk factors relating to the GCI Business.

GCI faces competition, including from non-geostationary satellites, that may reduce its market share and harm its financial performance.

There is substantial competition in the telecommunications and entertainment industries. Through mergers, various service integration strategies, and business alliances, major providers are striving to strengthen their competitive positions. GCI faces increased wireless services competition from national carriers in the Alaska market who are often able to offer more flexible subscription packages and exclusive content. GCI also faces competition from direct-to-user non-geostationary satellite-based internet providers.

Our Company expects competition to increase as a result of the rapid development of new technologies, services, and products, including the increasing use of artificial intelligence (“AI”) and machine learning technologies, and the availability of increased federal funding of broadband infrastructure. Our Company cannot predict which of many possible future technologies, products or services will be important to maintain GCI’s competitive position or what expenditures will be required to develop and provide these technologies, products or services. GCI’s ability to compete successfully will depend on marketing and on its ability to anticipate and respond to various competitive factors affecting the industry, including new services that may be introduced, improvements in network quality and capacity, changes in consumer preferences or habits, demographic trends, economic conditions, and pricing strategies by competitors. To the extent GCI does not keep pace with technological advances or fails to timely respond to changes in competitive factors in its industry and in its markets, GCI could lose market share or experience a decline in its revenue and net income. Competitive conditions create a risk of market share loss and the risk that customers shift to less profitable, lower margin services. Competitive pressures also create challenges for GCI’s ability to grow new businesses or introduce new services successfully and execute its business plan. GCI also faces the risk of potential price cuts by our Company’s competitors partially driven by federal funding for broadband infrastructure that could materially adversely affect its market share and gross margins.

GCI’s wholesale customers, including its major roaming customers, may construct facilities in locations where they currently contract with GCI to use its network to provide service on their behalf. Our Company could experience a decline in revenue and net income if any of GCI’s wholesale customers constructed or expanded their existing networks in places where service is currently provided by GCI’s network. Some of GCI’s wholesale customers have greater access to financial, technical, and other resources than GCI does. GCI expects to continue to offer competitive alternatives to such customers in order to retain significant traffic on GCI’s network. Our Company cannot predict whether such customers will continue to see GCI’s network as a compelling alternative. GCI’s inability to negotiate renewals of such contracts could have a material adverse effect on our Company’s business, financial condition, and results of operations.

If GCI experiences customer losses, or a change in demand for our products and services, our Company’s financial performance will be negatively impacted.

GCI is in the business of selling communication services to subscribers, and its economic success is based on its ability to retain current subscribers and attract new subscribers. If GCI is unable to retain and attract subscribers, its and our Company’s financial performance will be impaired. GCI’s rates of subscriber acquisition and turnover are affected by a number of competitive factors, including the size of its service areas, network performance and reliability issues, changing technologies, its device and service offerings and the costs thereof, subscribers’ perceptions of its services, and customer care quality. Managing these factors and subscribers’ expectations is essential in attracting and retaining subscribers. Although GCI has implemented programs to attract new subscribers and address subscriber turnover, our Company cannot

 

26

 

make assurances that these programs or GCI’s strategies to address subscriber acquisition and turnover will be successful. A high rate of turnover or subscriber loss, or a change in demand for our products and services, would reduce revenue and increase the total marketing expenditures required to attract the minimum number of subscribers required to sustain GCI’s business plan which, in turn, could have a material adverse effect on our Company’s business, financial condition, and results of operations.

Adverse economic conditions in the U.S. and inflationary pressures on input costs and labor could impact GCI’s results of operations.

In recent years, varying factors have contributed to significant volatility and disruption of financial markets and global supply chains. Additionally, the U.S. Federal Reserve began steadily increasing interest rates in March 2022 and throughout 2023, though they started decreasing rates in 2024. The imposition of tariffs and other economic measures which may have an impact on inflation, and inflationary cost pressures and recessionary fears have negatively impacted the U.S. and global economy. Unfavorable economic conditions, such as a recession or economic slowdown in the U.S., or inflation in the markets in which GCI operates, could negatively affect the affordability of, and demand for, GCI’s products and services and its cost of doing business. GCI has experienced increased interest expense as a result of higher interest rates, as well as higher labor, information technologies and capital expenditure costs due to inflation. Increased costs to equipment, for example due to increased tariffs, will also impact GCI’s results.

The Alaska economy is dependent upon the oil industry, state and federal spending, investment earnings and tourism. A decline in oil prices would put significant pressure on the Alaska state government budget. The Alaska state government has financial reserves that GCI believes may be able to help fund the state government for the next couple of years. In addition, following the 2024 U.S. Presidential election, the new administration has created the Department of Government Efficiency (“DOGE”), which is tasked with reducing waste and fraud in U.S. government spending, and reviewing overall U.S. government spending. If the U.S. government were to significantly reduce federal funding, including as a result of DOGE, such a reduction could have a material adverse impact on the state of Alaska and GCI. The potential impact of any reduction in federal spending cannot be predicted as this time. The Alaska economy is subject to recessionary pressures as a result of the economic impacts of volatility in oil prices, inflation, and other causes that could result in a decrease in economic activity. While it is difficult for GCI to predict the future impact of a recession on its business, these conditions have had an adverse impact on its business and could adversely affect the affordability of, and demand for, some of its products and services and cause customers to shift to lower priced products and services or to delay or forgo purchases of its products and services. GCI’s customers may not be able to obtain adequate access to credit, which could affect their ability to make timely payments to GCI and could lead to an increase in accounts receivable and bad debt expense. If Alaska experiences a recession or economic slowdown, it could negatively affect GCI’s business, including its financial position, results of operations, or liquidity, as well as its ability to service debt, pay other obligations, and enhance shareholder returns.

In addition, beginning in 2022 and continuing in 2023 and 2024, GCI began to experience the impact of inflation-sensitive items, including upward pressure on the costs of materials, labor, and other items that are critical to GCI’s business. GCI continues to monitor these impacts closely and, if costs continue to rise, GCI may be unable to recoup losses or offset diminished margins by passing these costs through to its customers or implementing offsetting cost reductions.

GCI may be unable to obtain or maintain the roaming services it needs from other carriers to remain competitive.

Some of GCI’s competitors have national networks that enable them to offer nationwide coverage to their subscribers at a lower cost than GCI can offer. The networks GCI operates do not, by themselves, provide national coverage, and GCI must pay fees to other carriers that provide roaming services to it. GCI currently relies on roaming agreements with several carriers for the majority of its roaming services.

 

27

 

The FCC requires commercial mobile radio service providers to provide roaming, upon request, for voice and SMS text messaging services on just, reasonable, and non-discriminatory terms. The FCC also requires carriers to offer data roaming services. The rules do not provide or mandate any specific mechanism for determining the reasonableness of roaming rates for voice, SMS text messaging or data services and require that roaming complaints be resolved on a case-by-case basis, based on a non-exclusive list of factors that can be taken into account in determining the reasonableness of particular conduct or rates. If GCI were to lose the benefit of one or more key roaming or wholesale agreements unexpectedly, it may be unable to obtain similar replacement agreements and as a result may be unable to continue providing nationwide voice and data roaming services for its customers or may be unable to provide such services on a cost-effective basis. GCI’s inability to obtain new or replacement roaming services on a cost-effective basis may limit its ability to compete effectively for wireless customers, which may increase customer turnover and decrease GCI’s revenue, which in turn could materially adversely affect our Company’s business, financial condition and results of operations.

GCI’s business is subject to extensive governmental legislation and regulation. Changes to or interpretations of existing statutes, rules, regulations, or the adoption of new ones, could adversely affect GCI’s business, financial position, results of operations, or liquidity.

As described below under “Business — Regulatory Matters,” GCI’s business is subject to extensive federal and state governmental legislation and regulation. There can be no assurance that future changes or additions to the regulatory system under which GCI operates will benefit or have no adverse effect on GCI. Similarly, these rules and regulations are subject to interpretation by the applicable agencies, and new interpretations, which could impact GCI’s operations and have an adverse effect on GCI’s business, position, results of operations, or liquidity. There can be no assurance that future regulatory actions taken by Congress, the FCC or other federal, state or local government authorities, by the judiciary or through Executive Branch action, will not have a similar effect.

With respect to wireless services provided by GCI, the licensing, leasing, construction, operation, sale and interconnection arrangements of wireless communications systems are regulated by the FCC, Alaska, and potentially other state and local regulatory agencies. In particular, the FCC grants wireless licenses and imposes significant regulation on licensees of wireless spectrum. There can be no guarantee that GCI’s existing licenses will be renewed. In addition, while the FCC does not currently regulate wireless service providers’ rates, states may exercise authority over such things as certain billing practices and consumer-related issues. These regulations could increase the costs of GCI’s wireless operations, including with respect to the maintenance of existing licenses granted by the FCC, due to a failure to comply with applicable regulations. GCI is also subject to FCC rules relating to E911 capabilities and failure to comply with these rules could subject GCI to significant fines.

With respect to Internet services provided by GCI, GCI could be adversely impacted by the reclassification of Internet service as a telecommunications service under Title II of the Communications Act. In 2015, the FCC classified Internet service as a telecommunication service. The FCC’s implementing regulations prohibited broadband providers from blocking or throttling most lawful public Internet traffic, from engaging in paid prioritization of that traffic, and from unreasonably interfering with or disadvantaging end users’ and edge providers’ ability to send traffic to, from, and among each other. Although a 2018 FCC order returned to a Title I classification of Internet service and eliminated many of the requirements imposed in its initial 2015 order, in 2024 the FCC adopted an order again reclassifying Internet services as a Title II service and adopting “net neutrality” rules regulating the Internet under Title II. On January 2, 2025, the United State Court of Appeals for the Sixth Circuit vacated the FCC’s 2024 order. Nonetheless, the new administration, Congress and state legislatures may undertake similar efforts. For example, California and Vermont have undertaken such efforts and some states, such as New York, have adopted rules capping Internet access rates for at least some services or customers. Any such rules could decrease GCI’s revenues and could adversely affect the manner and price of providing service, which could have a material adverse effect on GCI’s business, financial position, results of operations, or liquidity.

 

28

 

USF receivables and contributions are subject to change due to regulatory actions taken by the FCC, including the FCC’s interpretations of the USF program rules, or legislative actions that change the rules and regulations governing the USF program.

GCI participates in various USF programs, which provide government subsidies for service to schools, libraries and certain health care providers, to low-income and other eligible households and to support networks in high-cost areas. This support was 42% and 39% of GCI’s revenue for the years ended December 31, 2024 and 2023, respectively. GCI had USF net receivables of $125 million and $102 million at December 31, 2024 and 2023, respectively. In addition, the USF programs require GCI and other telecommunications providers to make contributions, based on certain revenue earned, into a fund used to subsidize nationwide these USF programs. The USF programs in which GCI participates are highly regulated. While the rules and regulations governing the USF programs are fairly robust, there can be no assurance that any new rules or regulations adopted will not impact GCI’s USF program anticipated receivables or contribution payments. Further, the FCC and Universal Service Administrative Company (“USAC”) may interpret or apply the applicable rules and regulations in ways that are unexpected to GCI or other program participants. As a result, material changes to receivables and contributions may occur, which could have an adverse effect on GCI’s business and our Company’s financial position, results of operations or liquidity. As described below in “Business — Regulatory Matters,” GCI has experienced material changes to receivables and contributions from the USF programs in recent years. For example, in October 2018, the FCC’s Wireline Competition Bureau notified GCI of its decision to reduce rural rates charged to Rural Health Care (“RHC”) Program customers for the funding year that ended on June 30, 2018 by approximately 26%, resulting in a reduction of total support payments of $28 million, and applied the same cost methodology for the funding years ended on June 30, 2019 and June 30, 2020. In addition, although the FCC has adjusted the RHC Program funding cap and committed to annual adjustments in future years for inflation, there is no guarantee that aggregate funding will be available to pay in full the approved funding for future years. Furthermore, the FCC has adopted a series of changes to the manner in which support issued under the RHC Program will be calculated and approved and has a pending rulemaking to consider additional future changes. Also, in November 2024, the FCC adopted changes to the mechanisms for support of fixed and mobile telecommunications networks in Alaska, with further changes under consideration in a pending rulemaking. Those changes will increase support for service to high-cost areas in 2025 and 2026, but that support may be subject to some reductions thereafter. GCI is currently unable to assess the substance, impact on funding or timing of any such changes to any of the USF programs.

Failure to comply with USF program requirements may have an adverse effect on GCI’s business and our Company’s financial position.

The USF programs in which GCI participates are highly regulated, and, in many cases, require highly technical and nuanced processes and procedures in order to obtain funding and to ensure compliance with the USF programs. For example, telecommunication providers and their customers are subject to regulations that set forth procedures that must be followed by both the provider and the customer, and there are limitations on communications between these parties. If a customer or a provider is found to have not complied with any aspect of these regulations, regardless of whether such noncompliance was unintentional or accidental, the FCC may deny funding and/or require disgorgement of any amounts received under the affected contracts. The FCC may also invalidate any affected contract and impose fines or penalties. Accordingly, failure to comply with these rules and regulations could have a material adverse effect on GCI’s business and our Company’s financial position, results of operations or liquidity.

Loss of GCI’s ETC status would disqualify it for high-cost and low-income USF support.

The USF pays support to ETCs to support the provision of facilities-based wireline and wireless telephone service in high-cost areas and to low-income consumers. If GCI were to lose its ETC status in any of the high-cost areas where it is currently an authorized ETC, whether due to legislative or regulatory reform or its failure to comply with applicable laws and regulations, GCI would be ineligible to receive high-cost or low-income USF support for providing service in that area, which would have an adverse effect on our Company’s business, financial position, results of operations or liquidity.

 

29

 

A disruption in the payment of USF support or federal grants on which GCI relies, through Executive Branch action or otherwise, could delay or halt those payments.

GCI receives a substantial portion of its revenues from federal universal service support to support infrastructure and services, as well as federal grants, whether as a recipient or a subrecipient, that fund infrastructure investments. On January 27, 2025, the Office of Management and Budget (“OMB”) issued a memorandum directing a pause in federal financial assistance pending review for consistency with presidential executive actions. On January 28, 2025, OMB clarified that this only applied to programs affected by certain specified executive actions, which did not appear to include FCC universal service support programs but may include some grants that GCI receives as a recipient or subrecipient, or for which it has applied. OMB withdrew the memorandum on January 29, 2025, and two federal district courts have subsequently issued preliminary injunctions affecting the memorandum. Further reviews may be ongoing by the FCC, the National Telecommunications and Information Administration or the Rural Utility Service. Any pause or other disruption in USF or grant disbursements, or if any pause were to extend to federal universal service support programs, or to other infrastructure grants GCI receives, or if any such pause were to become extended, could have a material adverse effect on GCI’s business and our Company’s financial position, results of operations or liquidity.

A successful legal challenge to the constitutionality of the USF could disrupt or eliminate GCI’s USF support.

There have been a number of legal challenges to the constitutionality of the USF. The U.S. Courts of Appeals for the Sixth and Eleventh Circuits rejected such challenges in 2023, as did a panel of three judges in the Fifth Circuit. However, on July 24, 2024, the U.S. Court of Appeals for the Fifth Circuit sitting en banc ruled that the USF program is unconstitutional as currently administered, and remanded the case to the FCC. In its decision, the en banc Fifth Circuit concluded that the public delegation of legislative authority to the FCC, combined with the private delegation of authority from the FCC to the USAC resulted in an impermissible and unconstitutional delegation of Congress’ Article I authority. The Supreme Court granted petitions for certiorari from the Fifth Circuit’s decision and heard argument on March 26, 2025; the case is likely to be decided by summer 2025. In addition, it is possible that additional cases and appeals will continue to be filed in relation to the matter. There is significant uncertainty regarding the outcome of the Supreme Court review, as well as whether any action taken by the FCC or Congress to resolve the issue would be sufficient and what impact such actions might have on the USF program. A Supreme Court ruling upholding the Fifth Circuit’s decision or, more broadly, determining that the legislation establishing the USF program is unconstitutional could disrupt or eliminate GCI’s USF support unless and until any identified legal defects with the program structure or administration are remedied. Such a ruling would likely result in a material decrease in revenue and accounts receivable, which would have an adverse effect on GCI’s business and an adverse effect on the Company’s financial position, results of operations or liquidity. USF support was 42% and 39% of GCI’s revenue for the years ended December 31, 2024 and 2023, respectively. GCI had USF net receivables of $125 million and $102 million at December 31, 2024 and 2023, respectively. Without USF support, telecommunications providers, including GCI, may need to consider various actions including, but not limited to, terminating certain high-cost or low profit services, discontinuing rural networks or a reduction in workforce, which could have a negative impact on GCI’s business.

GCI may not meet its performance plan milestones under the Alaska High Cost Order.

As an ETC, GCI receives support from the USF to support the provision of wireline local access and wireless service in high-cost areas. In 2016, the FCC published the Alaska High Cost Order, which requires GCI to submit to the FCC a performance plan with five-year and ten-year commitments. The FCC approved revised performance obligations in 2021. If GCI is unable to meet the final performance plan milestones approved by the FCC, it will be required to repay 1.89 times the average amount of support per location received over the ten-year term for the relevant number of locations that GCI failed to deploy to, plus potentially ten percent of its total Alaska High Cost Order support received over the ten-year term. In addition, failure to meet the performance plan milestones under the Alaska High Cost Order could result in GCI being disqualified from participating in the Alaska Connect Fund mobile high-cost support, which is a successor plan to the Alaska High Cost Order and would provide high-cost universal service support through 2034. Inability to meet GCI’s performance plan milestones with or without disqualification from

 

30

 

the Alaska Connect Fund could have an adverse effect on its business, financial position, results of operations, or liquidity, and could cause us to incur a fine of approximately $58.6 million dollars and an additional $7,951 per resident missed.

GCI may lose USF high-cost support after 2026 if certain competitive conditions are met.

On November 4, 2024, the FCC released an order establishing a new high-cost support mechanism for Alaska, the Alaska Connect Fund Order, to replace the Alaska High Cost Order, which was set to expire at the end of 2026. In the Alaska Connect Fund Order, the FCC increased by 30% the annual support that each Alaska High Cost Order recipient received, starting January 1, 2025, through the end of 2026 for mobile services and through the end of 2028 for fixed services. For mobile services, support may be reduced after 2026 to the extent associated with any areas deemed ineligible for support, and may be further reduced after 2030 in areas served by more than one Alaska Connect Fund Order supported provider, based upon a competitive selection process still pending further FCC consideration in a pending rulemaking proceeding. Because key elements of these processes are still being defined by the FCC, GCI cannot estimate whether or to what extent it will experience a reduction of mobile high-cost universal service support after 2026. Similarly, GCI cannot estimate whether or to what extent it may experience a reduction in fixed broadband support after 2028.

GCI may experience delayed or lost USF high-cost support if the FCC does not approve its mobile performance plan in 2026 or its fixed broadband performance plan in or after 2028.

Continuation of GCI’s high-cost support after 2026, for mobile service, and after 2028, for fixed voice and broadband service, is contingent upon obtaining FCC approval for its performance plan in which it would make commitments as to how support would be used to improve mobile and fixed broadband services, respectively. If GCI cannot obtain FCC approval of its performance plan by the end of 2026, for mobile services, or the end of 2028, for fixed services, it could be subject to a delay or loss of such support.

The decline in GCI’s Other revenue, which includes video, long-distance, and local access services, may accelerate.

Our Company expects GCI’s Other revenue, which includes video, long-distance and local access services, will continue to decline. GCI has experienced declines in video and voice subscribers, consistent with the industry. Video revenue has seen further losses as a result of the transition from traditional linear video delivery to IP delivery and GCI’s decision to discontinue selling bulk video packages for multi-dwelling units. GCI Holdings has announced that it plans to exit the video business in 2025, subject to regulatory approvals.

As competition from wireless carriers, as well as competition from GCI’s own product offerings, increases, our Company expects GCI’s long-distance and local access services’ subscribers and revenue will continue to decline and the rate of decline may accelerate. In addition, GCI’s success in the local telephone market depends on its continued ability to obtain interconnection, access, and related services from local exchange carriers on terms that are reasonable and that are based on the cost of providing these services. GCI’s ability to provide service in the local telephone market depends on its negotiation or arbitration with local exchange carriers to allow interconnection to the carrier’s existing local telephone network (in some Alaska markets at cost-based rates), to establish dialing parity, to obtain access to rights-of-way, to resell services offered by the local exchange carrier, and in some cases, to allow the purchase, at cost-based rates, of access to certain unbundled network elements. Future negotiations or arbitration proceedings with respect to new or existing markets could result in a change in GCI’s cost of serving these markets via the facilities of the Incumbent Local Exchange Carriers (“ILECs”) or via wholesale offerings. GCI’s local telephone services business faces the risk of unfavorable changes in regulation or legislation or the introduction of new regulations.

 

31

 

Failure to stay abreast of new technology could affect GCI’s ability to compete in the industry.

GCI tests and deploys various new technologies and support systems intended to enhance its competitiveness and increase the utility of its services. As GCI’s operations grow in size and scope, it must continuously improve and upgrade its systems and infrastructure while maintaining or improving the reliability and integrity of its systems and infrastructure. The emergence of alternative platforms such as mobile or tablet computing devices and the emergence of niche competitors who may be able to optimize products, services, or strategies for such platforms will require new investment in technology. Replacing or upgrading GCI’s infrastructure to keep pace with such technological changes could result in significant capital expenditures. Further, current and new wireless internet technologies such as 4G and 5G wireless broadband services continue to evolve rapidly to allow for greater speed and reliability, and our Company expects other advances in communications technology to occur in the future. GCI may not successfully complete the rollout of new technology and related features or services in a timely manner, and they may not be widely accepted by GCI’s customers or may not be profitable, in which case GCI could not recover its investment in the technology. There can be no assurance that GCI will be able to compete with advancing technology or introduce new technologies and systems as quickly as it would like or in a cost-effective manner. Deployment of technology supporting new service offerings may also adversely affect the performance or reliability of its networks with respect to both the new and existing services. Any resulting customer dissatisfaction could adversely affect GCI’s ability to retain customers and attract new customers and may have an adverse effect on our Company’s financial position, results of operations, or liquidity. In addition to introducing new technologies and offerings, GCI must phase out outdated and unprofitable technologies and services. If GCI is unable to do so on a cost-effective basis, GCI could experience reduced profits.

GCI’s operations are geographically concentrated in Alaska and are impacted by the economic conditions in Alaska, and GCI may not be able to increase its share of the existing market for its services.

GCI offers products and services to customers primarily throughout Alaska. Because of this geographic concentration, growth of GCI’s business and operations depends upon economic conditions in Alaska, which have been negatively impacted in recent years by a recession and the COVID-19 pandemic.

In addition, the customer base in Alaska is limited, and GCI has already achieved significant market penetration with respect to its service offerings in Anchorage and other locations in Alaska. GCI may not be able to continue to increase its share of the existing markets for its services, and no assurance can be given that the Alaskan economy will grow and increase the size of the markets GCI serves or increase the demand for the services it offers. The markets in Alaska for wireless and wireline telecommunications and video services are unique and distinct within the U.S. due to Alaska’s large geographical size, its sparse population located in a limited number of clusters, and its distance from the rest of the U.S.

Natural or man-made disasters or terrorist attacks could have an adverse effect on GCI’s business.

GCI’s technical infrastructure (including its communications network infrastructure and ancillary functions supporting its network such as service activation, billing and customer care) is vulnerable to damage or interruption from technology failures, power surges or outages, natural disasters, fires, human error, terrorism, intentional wrongdoing, or similar events. As a communications provider, there is an increased risk that GCI’s technological infrastructure may be targeted in connection with terrorism, either as a primary target, or as a means of facilitating additional attacks on other targets.

In addition, earthquakes, floods, fires, and other unforeseen natural disasters or events could materially disrupt GCI’s business operations or its provision of service in one or more markets. Specifically, the majority of GCI’s facilities are located in areas with known significant seismic activity. Costs GCI incurs to restore, repair or replace its network or technical infrastructure, as well as costs associated with detecting, monitoring, or reducing the incidence of unauthorized use, may be substantial and increase GCI’s cost of providing service. Many of the areas in which GCI operates have limited emergency response services and may be difficult to reach in an emergency situation. Should a natural disaster or other event occur, it could be weeks or longer before remediation efforts could be implemented, if they could be implemented at all. Further, any failure in, or interruption of, systems that GCI or third parties maintain to support ancillary functions, such as billing, point of sale, inventory management, customer care, and financial reporting, could materially impact GCI’s ability to timely and accurately record, process, and report information important

 

32

 

to our Company’s business. If any of the above events were to occur, GCI could experience higher churn, reduced revenue, and increased costs, any of which could harm its reputation and have a material adverse effect on our Company’s business, financial condition, or results of operations.

Additionally, our Company’s insurance may not be adequate to cover the costs associated with a natural disaster or terrorist attack.

Cyberattacks or other network disruptions could have an adverse effect on our Company and GCI’s business.

Our Company’s operations depend upon the transmission of information over the Internet. Unauthorized parties attempt to gain access to our Company’s and its vendors’ information systems by, among other things, hacking into its systems or those of third parties, through fraud or other means of deceiving our Company’s employees or its vendors, burglaries, errors by our Company or its vendors’ employees, misappropriation of data by employees, or other irregularities that may result in persons obtaining unauthorized access to its data. The techniques used to gain such access to our Company’s or its vendors’ information systems, data or customer information, disable or degrade service, or sabotage systems are constantly evolving and continue to become more sophisticated and targeted, may be difficult to detect quickly, and often are not recognized until launched against a target. Further, the use of AI and machine learning by cybercriminals may increase the frequency and severity of cybersecurity attacks against us or our suppliers, vendors and other service providers.

Cyberattacks against GCI’s or our Company’s vendors’ technological infrastructure or breaches of information systems may cause equipment failures, disruption of its or their operations, and potentially unauthorized access to confidential customer or employee data, which could subject our Company to increased costs and other liabilities as discussed further below. Cybersecurity incidents and cybersecurity threats, which include the use of malware, computer viruses, and other means for service disruption or unauthorized access to confidential customer or employee data, have increased in frequency, scope, and potential harm for businesses in recent years. It is possible for such cybersecurity incidents and cybersecurity threats to go undetected for an extended period of time, increasing the potential harm to GCI’s or our Company’s respective customers, employees, assets, and reputation. For example, third-party service providers, such as telecommunications and cloud services providers, have been subject to increasing cyberattacks from state-sponsored threat actors that could materially impact our information systems and operations.

To date, our Company and GCI have not been subject to cybersecurity incidents or disruptions of information systems that, individually or in the aggregate, have been material to our or GCI’s operations or financial condition. Although our Company and GCI have not detected such a material security breach or cybersecurity incident to date, our Company and GCI have been the target of events of this nature and expect to be subject to similar attacks in the future. Our Company and GCI engage in a variety of preventive measures at an increased cost intended to reduce the risk of cyberattacks and safeguard our information systems and confidential customer information, but as with all companies, these measures may not be sufficient for all eventualities, and there is no guarantee that they will be adequate to safeguard against all cybersecurity incidents, system compromises, or misuses of data. Such measures include, but are not limited to, the following practices: application whitelisting, anti-malware, message and spam filtering, encryption, advanced firewalls, threat detection, and URL filtering. Despite these preventive and detective actions, our and GCI’s efforts may be insufficient to repel a cybersecurity incident, detect all cybersecurity threats, or prevent disruption of information systems in the future and prevent the risks described above.

In addition, some of the most significant risks to GCI’s information systems, networks, and infrastructure include:

•

cyberattacks that disrupt, damage, or allow unauthorized access to GCI’s network and computer systems by criminal or terrorist actors, which may result in data breaches or network disruptions;

​

•

undesired human actions including intentional or accidental errors, misconfigurations, and break-ins;

​

•

malware (including viruses, worms, and Trojan horses), software defects, unsolicited mass advertising, denial of service attacks, ransomware, and other malicious or abusive attacks by third parties; and

​

•

unauthorized access to GCI’s information technology, billing, customer care, and provisioning systems and networks and those of its vendors and other providers.

​

 

33

 

If hackers or cybercriminals gain access to our or GCI’s information systems, networks, or infrastructure, they may be able to access, steal, publish, delete, misappropriate, modify or otherwise disrupt access to confidential customer or employee data. Moreover, additional harm to customers or employees could be perpetrated by third parties who obtain unauthorized access to the confidential customer data. A network or other disruption of information systems (including one resulting from a cyberattack or other cybersecurity incident) could cause an interruption or degradation of service and diversion of management attention, as well as permit access, theft, publishing, deletion, misappropriation, or modification of confidential customer data. Due to the evolving techniques used in cyberattacks to disrupt or gain unauthorized access to technology networks, our Company or GCI may not be able to anticipate or prevent such disruption or unauthorized access.

The costs imposed on our Company and GCI as a result of a cybersecurity incident or disruption of information systems could be significant. Among others, such costs could include increased expenditures on cybersecurity measures, litigation, regulatory actions, fines, sanctions, lost revenue from business interruption, and damage to our or GCI’s reputation and the public’s perception regarding GCI’s ability to provide a secure service. As a result, a cybersecurity incident could have a material adverse effect on GCI’s and our Company’s business, financial condition, and operating results. Our Company and GCI also face similar risks associated with security breaches and other cybersecurity incidents affecting third parties with which we affiliate or otherwise conduct business. While GCI maintains cyber liability insurance that provides both third-party liability and first-party insurance coverage, its insurance may not be sufficient to protect against all of its losses from any future disruptions or breaches of its systems or other events as described above.

The processing, storage, sharing, use, disclosure and protection of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements or differing views of personal privacy rights.

Through our Company’s operations, sales and marketing activities, it collects and stores certain non-public personal information related to its customers. Our Company also gathers and retains information about employees in the normal course of business. Our Company may share information about such persons with vendors, contractors and other third parties that assist with certain aspects of its business. The collection, storage, sharing, use, disclosure and protection of this information are governed by the privacy and data security policies maintained by these businesses. Moreover, there are federal, state and international laws regarding privacy and the collection, storage, sharing, use, disclosure and protection of personally identifiable information and user data, including regulations specific to GCI’s operations as a telecommunications carrier or video service provider. Specifically, personally identifiable information is increasingly subject to changing legislation and regulations, in numerous jurisdictions around the world, which are intended to protect the privacy of personal information that is collected, processed and transmitted in or from the governing jurisdiction. Compliance with these laws and regulations may be onerous and expensive and may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance.

For example, California has enacted the California Consumer Privacy Act (“CCPA”), which, among other things, allows California consumers to request that certain companies disclose the types of personal information collected by such companies. The CCPA became effective on January 1, 2020. The California Attorney General has issued regulations and guidance regarding the law. In November 2020, California voters approved the California Privacy Rights Act (“CPRA”), which amends and expands the CCPA and establishes the California Privacy Protection Agency to implement and enforce consumer privacy laws. Most of the CPRA’s provisions became effective on January 1, 2023. In addition, Maine, Virginia, Colorado, Utah, Connecticut, Oregon, Texas, Montana, Delaware, Florida, Iowa, Nebraska, New Hampshire and New Jersey enacted privacy and data protection laws in recent years. New privacy laws enacted in Tennessee, Indiana, Minnesota, Maryland, Kentucky and Rhode Island will take effect over the next two years. Other states in the U.S. are also separately proposing laws to regulate privacy and security of personal data. GCI’s failure, and/or the failure by the various third-party vendors and service providers with which GCI does business, to comply with applicable privacy policies or federal or state laws or changes in applicable laws and regulations, or any compromise of security that results in the unauthorized release of personally identifiable information or other user data could damage GCI’s and our reputations and the reputation of their third-party vendors and service providers, discourage potential users from trying their products and services and/or result in fines and/or proceedings by governmental agencies and/or consumers, any one or all of

 

34

 

which could adversely affect GCI’s business, financial condition and results of operations and, as a result, our Company. In addition, we, our subsidiaries or our business affiliates may not have adequate insurance coverage to compensate for losses.

Increases in data usage on GCI’s wired and wireless networks may cause network capacity limitations, resulting in service disruptions, reduced capacity, or slower transmission speeds for GCI’s customers.

Video streaming services, artificial intelligence data processing and peer-to-peer file sharing applications use significantly more bandwidth than traditional Internet activity such as web browsing and email. As use of these services continues to grow, GCI’s customers will likely use more bandwidth than in the past. Additionally, new wireless handsets and devices may place a higher demand for data on GCI’s wireless network. If this occurs, GCI could be required to make significant capital expenditures to increase network capacity in order to avoid service disruptions, service degradation, or slower transmission speeds for its customers. Alternatively, GCI could choose to implement network management practices to reduce the network capacity available to bandwidth-intensive activities during certain times in market areas experiencing congestion, which could negatively affect its ability to retain and attract customers in affected areas. While our Company believes demand for these services may drive customers to pay for faster speeds, competitive or regulatory constraints may preclude GCI from recovering the costs of the necessary network investments, which could result in an adverse impact to its business, financial condition, and operating results.

Prolonged service interruptions or system failures could affect GCI’s business.

GCI relies heavily on its network equipment, communications providers, data, and software to support all of its functions. GCI relies on its networks and the networks of others for substantially all of its revenue. GCI is able to deliver services and serve its customers only to the extent that it can protect its network systems against damage from power or communication failures, computer viruses, natural disasters, unauthorized access, and other disruptions. While GCI endeavors to account for failures in the network by providing back-up systems and procedures, GCI cannot guarantee that these back-up systems and procedures will operate satisfactorily in an emergency. Disruption to its billing systems due to a failure of existing hardware and backup protocols could have an adverse effect on our Company’s revenue and cash flow. Should GCI experience a prolonged failure, it could seriously jeopardize its ability to continue operations. In particular, should a significant service interruption occur, GCI’s ongoing customers may choose a different provider, and its reputation may be damaged, reducing its attractiveness to new customers.

If failures occur in GCI’s undersea fiber optic cable systems or GCI’s TERRA facilities and its extensions, or in terrestrial facilities owned by a third party upon which GCI relies for significant capacity, GCI’s ability to immediately restore the entirety of GCI’s service may be limited and our Company could incur significant costs.

GCI’s communications facilities include undersea fiber optic cable systems that carry a large portion of its traffic to and from the contiguous Lower 48 states, one of which provides an alternative geographically diverse backup communication facility to the other. GCI’s facilities also include TERRA and its extensions some of which are unringed, operating in a remote environment, and are at times difficult to access for repairs. Damage to an undersea fiber optic cable system or TERRA and its extensions could result in significant unplanned expense. For example, in January 2020, a fiber break occurred in GCI’s TERRA ring in Alaska’s Cook Inlet. Although service was not materially affected and has since been fully restored, and the financial impact was not significant, full functionality was not restored until March 2020 due to the uniquely challenging environmental conditions in the location of the fiber break. Similarly, in June 2023, a fiber break occurred in the network of a third-party provider of terrestrial capacity to GCI. GCI immediately re-routed customer services to be carried by GCI’s TERRA facilities, but service quality in several communities was materially impacted until full restoration was completed in September. Another fiber break is currently affecting the network of the third-party provider. GCI has re-routed customer services to be carried by GCI’s TERRA facilities and is considering additional alternatives until the network is restored. If a failure of both sides of the ring of GCI’s undersea fiber optic facilities or GCI’s ringed TERRA facility and its unringed extensions occurs and GCI is not able to secure alternative facilities, some of the communications services GCI offers to its customers could be interrupted, which could have a material adverse effect on our Company’s business, financial position, results of operations, or liquidity.

 

35

 

If a failure occurs in GCI’s satellite communications systems, GCI’s ability to immediately restore the entirety of its service may be limited.

GCI’s communications facilities include satellite transponders that GCI uses to serve many rural and remote Alaska locations. Each of GCI’s C-band and Ku-band satellite transponders are backed up using on-board transponder redundancy. In the event of a complete spacecraft failure the services are restored using capacity on other spacecraft that are held in reserve. If a failure of GCI’s satellite transponders occurs and GCI is not able to secure alternative facilities, some of the communications services GCI offers to its customers could be interrupted, which could have a material adverse effect on our Company’s business, financial position, results of operations, or liquidity.

GCI depends on a limited number of third-party vendors to supply communications equipment. If GCI does not obtain the necessary communications equipment, GCI will not be able to meet the needs of its customers.

GCI depends on a limited number of third-party vendors to supply wireless, Internet, video, and other telephony-related equipment. If GCI’s providers of this equipment are unable to meet GCI’s specifications or supply, in a timely manner or at all, the equipment necessary to meet GCI’s needs or provide them at an acceptable cost, GCI may not be able to satisfy demand for its services and competitors may fulfill this demand. Due to the unique characteristics of the Alaska communications markets (i.e., remote locations, rural, satellite-served, and low-density populations), in many situations GCI deploys and utilizes specialized, advanced technology and equipment that may not have a large market or demand. GCI’s vendors may not succeed in developing sufficient market penetration to sustain continuing production and may fail. Vendor bankruptcy, or acquisition without continuing product support by the acquiring company, may require GCI to replace technology before its otherwise useful end of life due to lack of ongoing vendor support and product development. New restrictions on sourcing of equipment utilized in federally-supported projects may further exacerbate these risks.

The suppliers and vendors on which GCI relies may also be subject to litigation with respect to technology on which GCI depends, including litigation involving claims of patent infringement. Such claims have been growing rapidly in the communications industry. Our Company is unable to predict whether GCI’s business will be affected by any such litigation. Our Company expects GCI’s dependence on key suppliers to continue as they develop and introduce more advanced generations of technology. The failure of GCI’s key suppliers to provide products or product support could have a material adverse effect on our Company’s business, financial position, and results of operations.

Supply chain disruptions could impact GCI’s ability to obtain equipment and other supplies for its business from its key suppliers and vendors on acceptable terms or at all. To date, GCI’s supply chain disruptions have been limited, but it may experience more severe supply chain disruptions in the future or supplier inability to manufacture or deliver equipment or parts. Any suspension or delay in GCI suppliers’ and vendors’ ability to provide us adequate equipment or supplies, or in GCI’s ability to procure equipment or supplies from other sources in a timely manner or at all, could impair its ability to meet customer demand and therefore could have a material adverse effect on our Company’s business, financial condition, or results of operations.

Climate change and increasingly stringent environmental laws, rules and regulations, and customer expectations could adversely affect GCI’s business.

There is a heightened public focus on climate change, sustainability, and environmental issues, and customer, regulatory, and shareholder expectations are evolving rapidly, with a focus on companies’ climate change readiness, response, and mitigation strategies. This has led to increased government regulation. Our Company expects that the trend of increasing environmental awareness will continue, which will result in higher costs of operations. GCI is committed to incorporating environmentally sustainable practices into its business. While undertaken in a manner designed to be as efficient and cost effective as possible, this may result in increases in GCI’s costs of operations relative to its competitors.

The potential impact of climate change on GCI’s operations and customers remains uncertain. The primary risk that climate change poses to GCI’s business is the potential for increases in severe weather in the areas in which it operates. See the risk factor entitled “Natural or man-made disasters or terrorist attacks

 

36

 

could have an adverse effect on GCI’s business” for more information on the impact of severe weather on our business. Potential physical effects of climate change, such as damage to GCI’s network infrastructure, could result in increased costs and loss of revenue. In addition, governmental initiatives to address climate change could, if adopted, restrict GCI’s operations, require GCI to make capital expenditures to comply with these initiatives, increase GCI’s costs, and impact GCI’s ability to compete. GCI’s inability to timely respond to the risks posed by climate change and the costs of compliance with climate change laws and regulations could have a material adverse impact on GCI.

In addition, there is regulatory uncertainty with respect to the U.S.’ climate change policy. On January 20, 2025, President Trump signed an executive order to withdraw the U.S. from the Paris Agreement, marking a significant shift in U.S. climate policy. It remains unclear what further actions President Trump may take with respect to domestic and international programs and initiatives, what support the Trump administration would have for any potential changes to such legislative programs and initiatives in Congress, and what the impacts of such changes may be.

GCI does not have insurance to cover certain risks to which it is subject, which could lead to the occurrence of uninsured liabilities.

As is typical in the communications industry, GCI is self-insured for damage or loss to certain of its transmission facilities, including its buried, undersea, and above-ground fiber optic cable systems. If GCI becomes subject to substantial uninsured liabilities due to damage or loss to such facilities, our Company’s financial position, results of operations or liquidity may be adversely affected.

GCI uses third-party vendors for its customer billing systems. Any errors, cyber-attacks or other operational disruption could have adverse operational, financial, and reputational effects on our Company’s business.

GCI’s third-party billing services vendors may experience errors, cybersecurity incidents, or other operational disruptions of their information systems that could negatively impact GCI and over which GCI may have limited control. Interruptions and/or failure of these billing services systems could disrupt GCI’s operations and impact its ability to provide or bill for its services, retain customers, or attract new customers, and negatively impact overall customer experience. Any occurrence of the foregoing could cause material adverse effects on our Company’s operations and financial condition, material weaknesses in its internal control over financial reporting and reputational damage.

Any significant impairment of GCI’s indefinite-lived intangible assets would lead to a reduction in its net operating performance and a decrease in its assets.

GCI had $1.3 billion of indefinite-lived intangible assets as of December 31, 2024, consisting of goodwill of $755 million, cable certificates of $550 million and other intangibles of $41 million. Goodwill represents the excess of cost over fair value of net assets acquired in connection with business acquisitions and the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition. GCI’s cable certificates represent agreements or authorizations with government entities that allow access to homes in cable service areas, including the future economic benefits of the right to solicit and service potential customers and the right to deploy and market new services to potential customers. GCI’s wireless licenses are from the FCC and give GCI the right to provide wireless service within a certain geographical area.

If GCI makes changes in its business strategy or if market or other conditions adversely affect its operations, it may be forced to record an impairment charge, which would lead to a decrease in its assets and a reduction in its net operating performance. GCI’s indefinite-lived intangible assets are tested annually for impairment during the fourth quarter and at any time upon the occurrence of certain events or substantive changes in circumstances that indicate the assets might be impaired. If the testing performed indicates that impairment has occurred, GCI is required to record an impairment charge for the difference between the carrying value and the fair value of the goodwill and/or the indefinite-lived intangible assets, as appropriate, in the period in which the determination is made. The testing of goodwill and indefinite-lived intangible assets for impairment requires GCI to make significant estimates about its future performance and cash flows, as well as other assumptions. These estimates can be affected by numerous factors, including changes in economic, industry, or market conditions, changes in underlying business operations, future

 

37

 

operating performance, changes in competition, or changes in technologies. Any changes to key assumptions, or actual performance compared with those assumptions, about GCI’s business and its future prospects or other assumptions could affect the fair value, resulting in an impairment charge.

If we are unable to retain key employees, our ability to manage our business could be adversely affected.

Our operational results have depended, and our future results will depend, upon the retention and continued performance of our management team. Our ability to hire and retain key employees for management positions could be impacted adversely by the competitive environment for management talent in the broadband communications and technology industries. The loss of the services of key members of management and the inability to hire, or a delay in hiring, new key employees could adversely affect our ability to manage our business and our future operational and financial results.

We may have future capital needs and may not be able to obtain additional financing, or refinance or renew our existing indebtedness, on acceptable terms. Further, our ability to service our debt and any other obligations will require access to funds, which may be restricted.

As of December 31, 2024, we had approximately $1,051 million principal amount of debt outstanding, consisting of (i) GCI, LLC’s 4.750% senior notes due 2028 (the “senior notes”), (ii) term and revolving loans under GCI, LLC’s senior secured credit facility with a syndicate of banks (the “senior credit facility”) and (iii) a note payable to Wells Fargo originally issued by GCI Holdings (the “Wells Fargo notes payable”).

Our ability to service our financial obligations will depend on our ability to access cash, and cash flows from operations may be insufficient to satisfy the respective financial obligations under indebtedness outstanding from time to time. Accessing cash at operating subsidiaries will depend on those subsidiaries’ individual operating results and any statutory, regulatory or contractual restrictions to which they may be or may become subject. Our other potential sources of cash include available cash balances, dividends and interest from its investments, monetization of public investments, and proceeds from asset sales.

Moreover, our ability to secure additional financing will depend upon our operating performance, general economic and credit market conditions, including interest rate levels and the availability of credit generally, the state of competition in our market, the outcome of certain legislative and regulatory issues and financial, business and other factors, many of which are beyond our control. There can be no assurance that sufficient financing will be available, or that we will be able to renew or refinance existing indebtedness, on desirable terms or at all. If financing is not available when needed or is not available on favorable terms, we may be unable to take advantage of business or market opportunities as they arise, which could have a material adverse effect on our business and financial condition.

We have significant indebtedness, which could adversely affect our business and financial condition.

As discussed above, as of December 31, 2024, we had approximately $1,051 million principal amount of debt outstanding. As a result of this significant indebtedness, we may:

•

experience increased vulnerability to general adverse economic and industry conditions;

​

•

be required to dedicate a substantial portion of cash flow from operations to principal and interest payments on our indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures, strategic acquisitions and investments and other general corporate purposes;

​

•

be exposed to the risk of increased interest rates with respect to any variable rate portion of indebtedness;

​

•

be impeded in our ability to satisfy our obligations with respect to our indebtedness;

​

•

be restricted from making strategic acquisitions or required to make non-strategic divestitures;

​

•

be exposed to the risk of increased interest rates with respect to any variable rate portion of indebtedness;

​

•

be limited in our ability to obtain additional financing for working capital, capital expenditures, product and service development, debt service requirements, acquisitions, and general corporate or other purposes; and

​

 

38

 

•

be limited in planning for, or reacting to, changes in our business or market conditions and placing us, including our subsidiaries, at a competitive disadvantage compared to competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage may prevent us from exploiting.

​

In addition, it is possible that we may need to incur additional indebtedness in the future.

We will require a significant amount of cash to service our debt and to meet other obligations. Our ability to generate cash depends on many factors beyond our control. If we are unable to meet our future capital needs it may be necessary for us to curtail, delay or abandon our business growth plans. If we incur significant additional indebtedness to fund our plans, it could cause a decline in our credit rating and could increase our borrowing costs or limit our ability to raise additional capital.

We will continue to require a significant amount of cash to satisfy our debt service requirements and to meet other obligations. Our ability to make payments on and to refinance our debt and to fund planned capital expenditures and acquisitions will depend on our ability to generate cash and to arrange additional financing in the future. These abilities are subject to, among other factors, our credit rating, our financial performance, general economic conditions, prevailing market conditions, the state of competition in our market, the outcome of certain legislative and regulatory issues and other factors that may be beyond our control. Our business may not generate sufficient cash flow from operations and future borrowings may not be available to us in an amount sufficient to enable us to pay our debt or to fund our other liquidity needs. We may need to refinance all or a portion of our debt on or before maturity. We may not be able to refinance any of our debt on commercially reasonable terms or at all.

The agreements that govern our current and future indebtedness may contain various affirmative and restrictive covenants that will limit our discretion in the operation of our business.

The agreements governing our indebtedness contain various covenants that could materially and adversely affect our ability to finance future operations or capital needs and to engage in other business activities that may be in our best interest.

We may also enter into certain other indebtedness arrangements in the future. The instruments governing such indebtedness often contain covenants that, among other things, place certain limitations on a borrower’s ability to incur more debt, exceed specified leverage ratios, pay dividends, make distributions, make investments, repurchase stock, create liens, enter into transactions with affiliates, merge or consolidate, and transfer or sell assets. Any failure to comply with such covenants could result in an event of default, which, if not cured or waived, could have a material adverse effect on our business and financial condition.

The various covenants in existing or future indebtedness may restrict our ability to expand or to pursue business strategies. Our ability to comply with these covenants may be affected by events beyond our and their control, such as prevailing economic conditions and changes in regulations, and if such events occur, we cannot be sure that we, and our subsidiaries, will be able to comply. A breach of these covenants could result in a default under the indentures and/or the credit agreements. If there were an event of default under the indentures and/or the credit agreements, holders of such defaulted debt could cause all amounts borrowed under these instruments to be due and payable immediately. Additionally, if we fail to repay the debt under any secured indebtedness when it becomes due, the lenders under such indebtedness could proceed against the assets that are pledged to them as security. Our assets or cash flow, and our subsidiaries’ assets or cash flow, may not be sufficient to repay borrowings under outstanding debt instruments in the event of a default thereunder.

Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Our borrowings under the senior credit facility are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness could increase even though the amount borrowed remained the same, and our net income and cash flow could decrease.

In order to manage our exposure to interest rate risk, in the future, we may enter into derivative financial instruments, typically interest rate swaps and caps, involving the exchange of floating for fixed rate

 

39

 

interest payments. If we are unable to enter into interest rate swaps, it may adversely affect our cash flow and may impact our ability to make required principal and interest payments on our indebtedness and, even if we use these instruments to selectively manage risks, there can be no assurance that we will be fully protected against material interest rate fluctuations.

Factors Relating to Ownership of GCI Group Common Stock and the Securities Market

It is not certain that an active trading market will develop or be sustained after the spin-off, and following the spin-off, our stock price may fluctuate significantly.

There is currently no public market for GCI Group common stock that will be received in the spin-off. Liberty Broadband cannot predict the prices at which GCI Group common stock may trade after the spin-off, the effect of the spin-off on the trading prices of the Liberty Broadband common stock or whether the aggregate market value of the shares of GCI Group common stock and Liberty Broadband common stock after the spin-off will be less than, equal to or greater than the market value of a share of Liberty Broadband’s common stock prior to the spin-off.

The market price of GCI Group common stock may fluctuate significantly due to a number of factors (none of which can be guaranteed to occur), some of which may be beyond our control, including:

•

actual or anticipated fluctuations in our operating results;

​

•

changes in earnings estimated by securities analysts or our ability to meet those estimates;

​

•

the operating and stock price performance of comparable companies; and

​

•

domestic and foreign economic conditions.

​

Our multi-series structure may depress the trading price of the shares of GCI Group common stock.

Our multi-series structure may result in a lower or more volatile market price of the shares of GCI Group common stock or in adverse publicity or other adverse consequences. Several stockholder advisory firms have announced their opposition to the use of multiple-class structures. As a result, the multi-series structure of GCI Group common stock may cause stockholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any actions or publications by stockholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of the shares of GCI Group common stock.

If the GCI Liberty board determines to issue the shares of Ventures Group common stock, GCI Group common stock will become a tracking stock and a tracking stock structure may cause market confusion.

Pursuant to the separation, holders of Liberty Broadband common stock on the record date for the distribution will not receive any shares of capital stock other than GCI Group common stock but the GCI Liberty restated articles will authorize the issuance of another group of common stock without the approval of GCI Liberty’s stockholders, the Ventures Group common stock. In the event that GCI Liberty issues Ventures Group common stock, GCI Group common stock will become a tracking stock. A tracking stock is a type of common stock that the issuing company intends to reflect or “track” the economic performance of a particular business or “group,” rather than the economic performance of the company as a whole. In the event that the GCI Group common stock and the Ventures Group common stock become tracking stocks, the GCI Group common stock would be intended to track the economic performance of particular businesses, assets and liabilities of GCI Liberty and its subsidiaries (the “GCI group”) as determined by the GCI Liberty board and the Ventures Group common stock would be intended to track the economic performance of other particular businesses, assets and liabilities of GCI Liberty and its subsidiaries (the “Ventures group”) as determined by the GCI Liberty board. GCI Liberty would attribute, for financial reporting purposes, all of its consolidated assets, liabilities, revenue, expenses and cash flows between the GCI group and the Ventures group. However, notwithstanding such attribution, GCI Liberty and its subsidiaries would retain legal title to all of GCI Liberty’s consolidated assets, and GCI Liberty’s tracking stock capitalization

 

40

 

would not limit GCI Liberty’s legal responsibility, or that of GCI Liberty’s subsidiaries, for the liabilities included in any set of financial statement schedules.

Holders of GCI Group common stock or Ventures Group common stock would not have any legal rights related to specific assets attributed to their associated group and, in any liquidation, holders of GCI Group common stock and Ventures Group common stock would be entitled to receive a proportionate share of GCI Liberty’s available net assets based on their respective number of liquidation units. See “Description of Our Capital Stock.” Depending on the composition of the assets underlying GCI Liberty’s tracking stock groups from time to time, confusion in the marketplace may occur if holders of GCI Liberty’s tracking stock mistakenly believe they own stock of a company attributed to the applicable tracking stock group or they have any equity or voting interests with respect to companies attributed to one of GCI Liberty’s tracking stock groups.

The GCI Liberty board has discretion to create the Ventures group and to reattribute businesses, assets and liabilities that are attributed to one tracking stock group to another tracking stock group, without the approval of any of GCI Liberty’s stockholders. Any such reattribution made by the GCI Liberty board, as well as the existence, in and of itself, of the right to effect a reattribution, may impact the ability of investors to assess the future prospects of the businesses and assets attributed to a tracking stock group, including liquidity and capital resource needs, based on past performance.

In addition, the assets attributed to one group are potentially subject to the liabilities attributed to another group, even if those liabilities arise from lawsuits, contracts or indebtedness that are attributed to such other group. No provision of the GCI Liberty restated articles prevents GCI Liberty from satisfying liabilities of one group with assets of another group, and GCI Liberty’s creditors will not in any way be limited by GCI Liberty’s tracking stock capitalization from proceeding against any assets they could have proceeded against if GCI Liberty did not have a tracking stock capitalization.

GCI Liberty cannot assure you that the market price of the common stock related to a group will, in fact, reflect the performance of the group of businesses, assets and liabilities attributed to that group. Holders of GCI Group common stock and Ventures Group common stock (if and when issued) will be common stockholders of GCI Liberty as a whole and, as such, will be subject to all risks associated with an investment in GCI Liberty and all of GCI Liberty’s businesses, assets and liabilities. As a result, the market price of each tracking stock may, in part, reflect events that are intended to be reflected or tracked by a different tracking stock of GCI Liberty.

If the GCI Liberty board decides to implement a tracking stock capital structure, such structure could create conflicts of interest, and the GCI Liberty board may make decisions that could adversely affect only some holders of GCI Liberty’s common stock.

If the GCI Liberty board decides to issue the Ventures Group common stock, such tracking stock structure could give rise to occasions when the interests of holders of stock related to one group might diverge or appear to diverge from the interests of holders of stock of the other group. GCI Liberty’s officers and directors owe fiduciary duties to GCI Liberty as a whole and all of GCI Liberty’s stockholders, as opposed to only holders of a particular group. Decisions deemed to be in the best interest of GCI Liberty and all of GCI Liberty’s stockholders may not be in the best interest of a particular group when considered independently.

Holders of shares of stock relating to a particular group may not have any remedies if any action by GCI Liberty’s directors or officers has an adverse effect on only that stock, or on a particular series of that stock.

If the GCI Liberty board decides to implement a tracking stock capital structure, Nevada law and the provisions of the GCI Liberty restated articles may protect decisions of the GCI Liberty board that have a disparate impact upon holders of shares of stock relating to a particular group, or upon holders of any series of stock relating to a particular group. Under Nevada law, the GCI Liberty board has a duty to act with due care and in the best interests of all of GCI Liberty’s stockholders, regardless of the stock, or series, they hold. Under Nevada law and the GCI Liberty restated articles, our board of directors owes fiduciary duties to act in good faith and with a view to the interests of GCI Liberty, including the interests of all common stockholders, and does not have separate or additional duties to any subset of those stockholders.

 

41

 

There is no statutory or judicial authority in Nevada establishing that decisions by directors or officers involving differing treatment of holders of tracking stocks would be judged by a standard other than Nevada’s statutory business judgment rule. In addition, our board of directors, in acting with a view to the interest of the corporation, may consider other relevant facts, circumstances, contingencies or constituencies, which may include interests beyond those of just the stockholders, such as the interests of employees, customers or creditors, as well as considerations about the economy or society, among other interests. In some circumstances, GCI Liberty’s directors or officers may be required to make a decision that might be viewed as relatively disadvantageous to the holders of shares relating to a particular group or to the holders of a particular series of that stock. Under the principles of Nevada law, including the business judgment rule referred to above, you may not be able to successfully challenge decisions that you believe have a disparate impact upon the stockholders of one of GCI Liberty’s groups if the GCI Liberty board acts through disinterested and independent members, in good faith and with a view to the interests of GCI Liberty, including all of GCI Liberty’s stockholders and other constituencies which the board is permitted to consider. Additionally, if the presumption that a director or officer so acted is rebutted, it must also be proven that such breach of a duty involved intentional misconduct, fraud or a knowing violation of law.

GCI Liberty may dispose of its assets, even if they are attributed to a tracking stock group, without your approval.

Nevada law requires stockholder approval only for a sale or other disposition of all of the property and assets of GCI Liberty taken as a whole, and the GCI Liberty restated articles do not require a separate class vote in the case of a sale of any amount of assets of the tracking stock groups of GCI Liberty. Pursuant to the GCI Liberty restated articles, GCI Liberty may approve sales and other dispositions of any amount of the assets of a tracking stock group without any stockholder approval unless the GCI Liberty board seeks to classify a group disposition (as defined below) as an exempt disposition (as defined below).

If GCI Liberty disposes of all or substantially all of the assets attributed to any group (which means, for this purpose, assets representing at least 80% of the fair market value of the total assets of the disposing group, as determined by the GCI Liberty board), GCI Liberty would be required under the terms of the GCI Liberty restated articles, if the disposition is not an exempt disposition under the terms of the GCI Liberty restated articles, to choose one or more of the following three alternatives:

•

declare and pay a dividend on the disposing group’s common stock;

​

•

redeem shares of the disposing group’s common stock in exchange for cash, securities or other property; and/or

​

•

convert all or a portion of the disposing group’s outstanding common stock into common stock of the other group at a specified premium.

​

Pursuant to the GCI Liberty restated articles, an “exempt disposition” includes the following with respect to each tracking stock group:

•

the disposition of all or substantially all of GCI Liberty’s assets in connection with the liquidation, dissolution or winding up of GCI Liberty;

​

•

a dividend, other distribution or redemption in accordance with the GCI Liberty restated articles;

​

•

a disposition of all or substantially all of the assets of such tracking stock group (“group disposition”) to a party controlled by GCI Liberty;

​

•

a group disposition in connection with any disposition of all or substantially all of the assets of such tracking stock group in which GCI Liberty receives equity securities of the purchaser, if a significant portion of the business of such purchaser is similar or complementary to the businesses attributable to such group prior to such disposition; or

​

•

a group disposition as to which the GCI Liberty board obtains the requisite approval of the applicable voting stockholders to classify such group disposition as an exempt disposition.

​

See “Description of Our Capital Stock.”

 

42

 

In this type of a transaction, holders of the disposing group’s common stock may receive less value than the value that a third-party buyer might pay for all or substantially all of the assets of the disposing group.

The GCI Liberty board will decide, in its sole discretion, how to proceed, and it is not required to select the option that would result in the highest value to holders of any stock related to a particular group.

The GCI Liberty board may, in its sole discretion, elect to convert the common stock relating to one group into common stock relating to the other group, thereby changing the nature of your investment and possibly diluting your economic interest in GCI Liberty, which could result in a loss in value to you.

The GCI Liberty restated articles will permit the GCI Liberty board, in its sole discretion, to convert all of the outstanding shares of common stock relating to one of GCI Liberty’s groups into shares of common stock of the other group on terms described in paragraphs (b)(ii)-(iii) of Article IV, Section A.2 of the GCI Liberty restated articles, the form of which is to be filed as an exhibit to the registration statement of which this prospectus forms a part. The foregoing conversion would be made at a ratio based on the relative trading prices of Series C GCI Group common stock (or another series of GCI Group common stock subject to certain limitations) and Series C Ventures Group common stock (or another series of Ventures Group common stock, subject to certain limitations) over a specified 20-trading day period. A conversion would preclude the holders of stock related to each group involved in such conversion from retaining their investment in a security that is intended to reflect separately the performance of the relevant group. GCI Liberty cannot predict the impact on the market value of GCI Liberty’s common stock of (1) the GCI Liberty board’s ability to effect any such conversion or (2) the exercise of this conversion right by the GCI Liberty board. In addition, the GCI Liberty board may effect such a conversion at a time when the market value of GCI Liberty’s different stocks could cause the stockholders of one group to be disadvantaged.

Holders of the common stock of tracking stock groups will vote together and will have limited separate voting rights.

Holders of the common stock of tracking stock groups will vote together as a single class, except in certain limited circumstances prescribed by the GCI Liberty restated articles or under Nevada law. If GCI Liberty attributes assets, liabilities and businesses to the Ventures group and issues shares of Ventures Group common stock, each share of Series B common stock of each group will have ten votes per share, and each share of Series A common stock of each group will have one vote per share. Holders of Series C common stock of each group will have no voting rights, other than those required under Nevada law and in such case, will have 1/100th of a vote per share. When holders of GCI Group common stock and the Ventures Group common stock vote together as a single class, holders having a majority of the votes will be in a position to control the outcome of the vote even if the matter involves a conflict of interest among GCI Liberty’s stockholders or has a greater impact on one group than another. Except as required under Nevada law, the holders of any shares of any class or series of GCI Liberty capital stock can validly approve a proposal that has been submitted by the GCI Liberty board to the stockholders for approval to amend the GCI Liberty restated articles in any manner that affects one or more classes or series of GCI Group common stock or GCI Liberty non-voting preferred stock (collectively, the “GCI Liberty capital stock”) that has been authorized even if no shares of such class or series of authorized GCI Liberty capital stock is outstanding as of the date of such approval.

For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including disclosures about our executive compensation, that apply to other public companies.

We are classified as an “emerging growth company” under the JOBS Act. As a result, we have reduced Sarbanes-Oxley Act compliance requirements, as discussed elsewhere, for as long as we are an emerging growth company, which may be up to five full fiscal years. Unlike other public companies, we will not be required to, among other things, (i) comply with certain audit-related requirements that we would otherwise be subject to but for our status as an emerging growth company, (ii) provide certain disclosures regarding executive compensation required of larger public companies or (iii) hold nonbinding advisory votes on executive compensation.

 

43

 

To the extent that we rely on any of the exemptions available to emerging growth companies, you will receive less information about our executive compensation and internal control over financial reporting than issuers that are not emerging growth companies. If some investors find GCI Group common stock to be less attractive as a result, there may be a less active trading market for GCI Group common stock and our stock price may be more volatile.

If, following the separation, we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, or our internal control over financial reporting is not effective, the reliability of our financial statements may be questioned and our stock price may suffer.

Section 404 of the Sarbanes-Oxley Act requires any company subject to the reporting requirements of the U.S. securities laws to complete a comprehensive evaluation of its and its consolidated subsidiaries’ internal control over financial reporting. To comply with this statute, we will be required to document and test our internal control procedures, our management will be required to assess and issue a report concerning our internal control over financial reporting, and our independent auditors will be required to issue an attestation regarding our internal control over financial reporting. However, as an emerging growth company, we will not be required to have our independent auditors attest to the effectiveness of our internal control over financial reporting until our first annual report subsequent to ceasing to be an emerging growth company. As a result, we may not be required to have our independent auditors attest to the effectiveness of our internal control over financial reporting until as late as the annual report for the year ending [December 31, 2029]. Although Liberty Broadband does not expect the annual costs to comply with Section 404 to be significant (based on Liberty Broadband’s preliminary assessments), the rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex, subject to change, and require significant documentation, testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act. If our management cannot favorably assess the effectiveness of our internal control over financial reporting when we are required to do so or our auditors identify material weaknesses in our internal control, investor confidence in our financial results may weaken, and our stock price may suffer.

It may be difficult for a third party to acquire us, even if doing so may be beneficial to our stockholders.

Certain provisions of our restated articles and bylaws may discourage, delay or prevent a change in control of GCI Liberty that a stockholder may consider favorable. These provisions include the following:

•

authorizing a capital structure with multiple series of common stock of each group: a Series B share that entitles the holders to ten votes per share, a Series A share that entitles the holders to one vote per share, and a Series C share that, except as otherwise required by applicable law, entitles the holders to no voting rights;

​

•

classifying our board of directors with staggered three-year terms, which may lengthen the time required to gain control of our board of directors;

​

•

limiting who may call special meetings of stockholders;

​

•

prohibiting stockholder action by written consent (subject to certain exceptions), thereby requiring stockholder action to be taken at a meeting of the stockholders;

​

•

requiring stockholder approval by holders of at least 662∕3% of our voting power with respect to certain extraordinary matters, such as removal of directors, a merger or consolidation, a sale of all or substantially all of our assets or an amendment to our restated articles (except in the event approved by at least 75% of our board of directors);

​

•

establishing advance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and

​

•

the existence of authorized and unissued stock, including “blank check” preferred stock, which could be issued by our board of directors to persons friendly to its then-current management, thereby

​

 

44

 

protecting the continuity of its management, or which could be used to dilute the stock ownership of persons seeking to obtain control of our Company.

Case law in Nevada may be less likely to provide guidance for specific fact scenarios than in Delaware.

We are a Nevada corporation. Because of Delaware’s prominence as a state of incorporation for many large corporations (including Liberty Broadband), the Delaware courts have developed considerable expertise in dealing with corporate issues and a substantial body of case law has developed construing Delaware law under certain sets of facts. While Nevada also has adopted comprehensive, modern and flexible corporate law statutes, because the volume of Nevada case law concerning the effects of its statutes and regulations is more limited, we may experience, and our stockholders may experience, less predictability with respect to the legal requirements in connection with corporate affairs and transactions, and stockholders’ rights to challenge them in specific situations where the application of the statute may be open to differing interpretations.

Our directors and officers are protected from liability for a broad range of actions.

Nevada law, by default, with certain specific exceptions, eliminates the liability of directors and officers, to a corporation or its stockholders, except where (i) the presumption that such director or officer has acted in good faith, with a view to the interests of the corporation has been rebutted, and (ii) such director’s or officer’s act or failure to act (or unlawful payment of dividends or making of other distributions) in breach of his or her fiduciary duties involved intentional misconduct, fraud or a knowing violation of law. Our restated articles will provide that, to the fullest extent permitted by Nevada law, our Company’s directors and officers will not be individually liable to the Company or any of its stockholders or creditors for damages as a result of any act or failure to act in his or her capacity as a director or officer.

Our restated articles will provide that the Eighth Judicial District Court of the State of Nevada shall be the exclusive forum for certain litigation that may be initiated by our stockholders, and that the federal courts shall be the exclusive forum for claims under the Securities Act; these provisions could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our restated articles will provide that, subject to limited exceptions, the Eighth Judicial District Court of the State of Nevada in Clark County, Nevada (the “Nevada Eighth Judicial District Court”) (or if the Nevada Eighth Judicial District Court does not have jurisdiction, any other state district court located in the State of Nevada, and if no state district court in the State of Nevada has jurisdiction, any federal court located in the State of Nevada) shall, to the fullest extent permitted by law, be the exclusive forum for certain specified types of “internal actions” as defined under Nevada law, including (a) those brought in the name or right of our Company or on its behalf; (b) those for or based upon a breach of fiduciary duty against any director, officer, employee or agent of our Company in such capacity; (c) those arising pursuant to, or to interpret, apply, enforce or determine the validity of, any provision of the Nevada statutes with respect to business entities, the articles of incorporation or the bylaws of our Company, or certain voting agreements or trusts to which it may be a party.

In addition, our restated articles will provide that unless GCI Liberty consents in writing to the selection of an alternative forum, the federal district courts of the United States shall be, to the fullest extent provided by law, the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act. The GCI Liberty restated articles will further provide that, for the avoidance of doubt, this exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts of the United States have exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Furthermore, to the fullest extent permitted by law, the GCI Liberty restated articles will provide that the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, which creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or rules and regulations thereunder.

 

45

 

These choice of forum provisions may otherwise limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and our directors, officers, employees and agents. Stockholders who do bring a claim in the Nevada Eighth Judicial District Court could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near the State of Nevada. The Nevada Eighth Judicial District Court may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders. Similarly, the federal district courts may also reach different judgments in Securities Act cases than state courts. Alternatively, if a court were to find the choice of forum provision contained in our restated articles to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

The holders of any series of GCI Group common stock, or the holders of GCI Group common stock as a whole, may not have any remedies if an action by our directors or officers prioritizes other interests or has a disparate effect on GCI Group common stock or any series thereof.

Principles of Nevada law and the provisions of our restated articles may protect decisions of our board of directors that weigh interests different from those of the holders of GCI Group common stock, or any series thereof, or that have a disparate impact upon holders of any series of GCI Group common stock. Under Nevada law, the board of directors has the duty to exercise its powers in good faith and with a view to the interests of the corporation. In doing so, the board of directors may consider all relevant facts, circumstances, contingencies or constituencies, including, without limitation, the interests of the corporation’s employees, suppliers, creditors or customers; the economy of the state or the nation; the interests of the community or of society; the long-term or short-term interests of the corporation, including the possibility that these interests may be best served by the continued independence of the corporation; or the long-term or short-term interests of the corporation’s stockholders, including the possibility that these interests may be best served by the continued independence of the corporation. Directors may consider or assign weight to the interests of any particular person or group, or to any other relevant facts, circumstances, contingencies or constituencies and are not required to consider, as a dominant factor, the effect of a proposed corporate action upon any particular group or constituency having an interest in the corporation. Under the principles of Nevada law referred to above and the business judgment rule, you may not be successful in challenging these decisions if a majority of our board of directors, or a committee thereof, is disinterested, independent and adequately informed with respect to decisions of the board and acts in good faith and with a view to the interests of the corporation, including all of our stockholders.

Although Series B GCI Group common stock is expected to be quoted on the OTC Markets, there is no meaningful trading market expected for the stock.

The shares of Series B GCI Group common stock will not be widely held, with approximately [      ]% of the outstanding shares of Series B GCI Group common stock immediately following the spin-off expected to be beneficially owned by Mr. Malone (based on [      ] shares of Series B Liberty Broadband common stock outstanding as of [      ]). Although Series B GCI Group common stock is expected to be quoted on the OTC Markets, it is expected to be sparsely traded and will not have an active trading market. The OTC Markets tend to be highly illiquid, in part, because there is no national quotation system by which potential investors can track the market price of shares except through information received or generated by a limited number of broker-dealers that make markets in particular stocks. There is also a greater chance of market volatility for securities that are quoted on the OTC Markets as opposed to a national exchange or quotation system. This volatility is due to a variety of factors, including a lack of readily available price quotations, lower trading volume, the absence of consistent administrative supervision of “bid” and “ask” quotations, and market conditions. Each share of Series B GCI Group common stock will be convertible, at any time at the option of the holder, into one share of Series A GCI Group common stock, which is expected to be listed and traded on the Nasdaq Global Select Market under the symbol “GLIBA.”

 

46

 

Our multi-series voting structure may limit your ability to influence corporate matters and future issuances of GCI Group common stock or Ventures Group common stock may further dilute the voting power of shares of GCI Group common stock.

GCI Group common stock will be divided into three series of common stock: Series A GCI Group common stock, Series B GCI Group common stock and Series C GCI Group common stock. Holders of record of Series A GCI Group common stock are entitled, and holders of record of Series A Ventures Group common stock, if issued, will be entitled, to one vote for each share of such stock and holders of record of Series B GCI Group common stock are entitled, and holders of record of Series B Ventures Group common stock, if issued, will be entitled, to ten votes for each share of such stock on all matters submitted to a vote of stockholders. Holders of record of Series C GCI Group common stock are not entitled, and holders of record of Series C Ventures Group common stock, if issued, will not be entitled, to any voting rights, except as otherwise required by Nevada law, in which case, each such holder of record of Series C GCI Group common stock or holder of record of Series C Ventures Group common stock will be entitled to 1/100th of a vote per share. Our restated articles will not provide for cumulative voting in the election of directors and will permit future issuances of shares of each series of GCI Group common stock and Ventures Group common stock following consummation of the spin-off. Any future issuances of GCI Group common stock and Ventures Group common stock may dilute your interest in our Company and the GCI Group common stock.

Although Series B GCI Group common stock is expected to be quoted on the OTC Markets, it is expected to be sparsely traded and will not have an active trading market. Only Series A GCI Group common stock shares and Series C GCI Group common stock shares are expected to be listed and traded on the Nasdaq Global Select Market. As a result, your ability to purchase Series B GCI Group common stock shares will be limited. Future issuances of Series B GCI Group common stock or Series B Ventures Group common stock will dilute the aggregate voting power of the issued and outstanding shares of GCI Group common stock or Ventures Group common stock, respectively, and may further concentrate the aggregate voting power of our issued and outstanding shares of common stock among the holders of Series B GCI Group common stock or Series B Ventures Group common stock, respectively. The voting and conversion rights of the Series B GCI Group common stock shares, our ability to issue additional Series B GCI Group common stock shares and your limited ability to purchase Series B GCI Group common stock shares may limit your ability to influence corporate matters and adversely affect the value of Series A GCI Group common stock shares and Series C GCI Group common stock shares.

 

47

 

THE SEPARATION

Overview

GCI Liberty is currently a wholly owned subsidiary of Liberty Broadband. Following the completion of the internal reorganization and prior to the distribution, GCI Liberty’s businesses, assets and liabilities will initially consist of the GCI Business. Immediately following the separation, GCI Liberty will be an independent publicly traded company, and Liberty Broadband will not retain any ownership interest in GCI Liberty.

GCI Liberty was formed in Nevada in December 2024 for the purpose of ultimately holding the GCI Business. As part of the separation, and prior to the completion of the distribution, Liberty Broadband and its subsidiaries will complete the internal reorganization in order for Liberty Broadband to transfer the GCI Business to GCI Liberty in exchange for GCI Liberty stock, including shares of GCI Liberty non-voting preferred stock, and the assumption of the GCI Liberty liabilities (as defined below). The internal reorganization will result in GCI Liberty owning, directly or indirectly, GCI, LLC and the operations comprising, and the entities that conduct, the GCI Business. The businesses and assets that will remain at Liberty Broadband following the separation will consist of the remainder of its businesses and assets not included in the internal reorganization or the distribution, including Liberty Broadband’s interest in Charter. For more information, see “— Internal Reorganization.”

Following the internal reorganization and after giving effect to the reclassification, which is discussed under “— Reclassification,” Liberty Broadband will distribute all the shares of GCI Group common stock held by Liberty Broadband to holders of record of Liberty Broadband common stock on the record date for the distribution. As of immediately prior to the time of the distribution, Liberty Broadband will hold all outstanding shares of the common stock of GCI Liberty, and the only outstanding shares of common stock of GCI Liberty will be the GCI Group common stock.

In connection with the separation, we expect to enter into certain agreements, including the separation and distribution agreement, the tax sharing agreement and the tax receivables agreement, with Liberty Broadband, pursuant to which, among other things, we and Liberty Broadband will indemnify each other against certain losses that may arise from, among other things, our respective businesses, assets and liabilities.

Simultaneously with the distribution, pursuant to the Malone exchange side letter entered into in connection with the proposed Charter combination, John C. Malone, the Chairman of the Liberty Broadband board and, following the completion of the spin-off, the Chairman of the GCI Liberty board, and certain holders of LBRDB shares that are persons, entities or trusts affiliated with Mr. Malone will exchange a sufficient number of shares of LBRDB held by such persons for newly issued shares of LBRDK on a one-for-one basis such that, immediately following such exchange, no set of holders comprised of five or fewer individuals, estates or trusts will collectively own (directly or constructively through related persons, entities or trusts) more than 19% of the aggregate voting power of Liberty Broadband to avoid the application of certain related party rules that otherwise could limit the availability of certain tax benefits to GCI Liberty following the separation. For more information see “Certain Relationships and Related Party Transactions — Charter Combination — Malone Exchange Side Letter.”

Reasons for the Separation

Liberty Broadband’s management and the Liberty Broadband board periodically review the performance of Liberty Broadband to evaluate and respond to strategic opportunities and to determine if changes to its capital structure or other strategic opportunities would better maximize stockholder value. At the time Liberty Broadband’s management and the Liberty Broadband board were evaluating the Charter combination, Liberty Broadband’s management and the Liberty Broadband board believed that a significant trading discount applied to Liberty Broadband capital stock. As a result, and with the view that a combination between Charter and Liberty Broadband’s interest therein would present a mutually beneficial opportunity to rationalize the capital structure of both companies and reduce the trading discount associated with Liberty Broadband common stock, the Liberty Broadband board determined to effect a change to Liberty Broadband’s capital structure by implementing the Charter combination.

 

48

 

In connection with the review undertaken with respect to the Charter combination, the Liberty Broadband board determined that the separation is advisable, fair to, and in the best interests of, Liberty Broadband and its stockholders. The Liberty Broadband board took into account a number of factors (none of which can be guaranteed to occur) when approving the separation, including that the separation would better position GCI Liberty to pursue opportunities for long-term growth and profitability unique to its own business and to enable it to more effectively implement its own distinct capital structure and capital allocation strategies.

Additionally, the completion of the separation is a condition to the Charter combination under the Charter merger agreement. Accordingly, unless validly waived by Charter or unless Liberty Broadband determines in good faith, no later than December 31, 2025, that the separation is not reasonably capable of being achieved prior to June 30, 2027 on the agreed terms solely as a result of certain specified events, and Liberty Broadband and Charter mutually agree on an alternative to the separation, the Charter combination will not be completed unless and until the separation is completed.

The Liberty Broadband board also considered a variety of risks, uncertainties and other potentially negative factors in its deliberations concerning the separation, including the following (which are not necessarily presented in order of relative importance): the risk of being unable to achieve the benefits expected from the separation; the potential disruption of the businesses of Liberty Broadband, including the GCI Business, as its management and employees devote time and resources to completing the separation; the substantial costs of effecting the separation; while the separation is expected to be completed, there is no assurance that all conditions to the parties’ obligations to complete the separation will be satisfied or, if permissible, waived, and as a result, it is possible that the separation might not be completed; the tax liabilities that will arise from the separation; and the various other applicable risks associated with Liberty Broadband and the separation, including the risks described in the sections entitled “Cautionary Statement Concerning Forward-Looking Statements” and “Risk Factors.”

The Liberty Broadband board evaluated the costs and benefits of the transaction as a whole and did not find it necessary to assign relative weights to the specific factors considered. The Liberty Broadband board concluded, however, that the potential benefits of the separation outweighed its potential costs, and that separating GCI Liberty from Liberty Broadband in the form of a distribution to Liberty Broadband’s stockholders and effecting the internal reorganization and the reclassification prior to the distribution, is appropriate, advisable and in the best interests of Liberty and its stockholders.

When and How You Will Receive Shares of GCI Group Common Stock

If all conditions to the distribution are satisfied or, if permissible, waived, on the distribution date, Liberty Broadband will distribute to each stockholder of record as of the record date, subject to the declaration of the dividend for the distribution, (i) 0.20 of a share of Series A GCI Group common stock for each whole share of Liberty Broadband Series A common stock held of record by such stockholder as of the record date, (ii) 0.20 of a share of Series B GCI Group common stock for each whole share of Liberty Broadband Series B common stock held of record by such stockholder as of the record date, and (iii) 0.20 of a share of Series C GCI Group common stock for each whole share of Liberty Broadband Series C common stock held of record by such stockholder as of the record date. Cash (with no interest) will be paid in lieu of fractional shares of GCI Group common stock.

Prior to the distribution, Liberty Broadband will deliver all of the issued and outstanding shares of GCI Group common stock to the distribution agent. [Broadridge Corporate Issuer Solutions, LLC] (the “transfer agent”) will serve as distribution agent in connection with the distribution and as transfer agent and registrar for GCI Liberty.

If your shares are held in “street name,” through a bank broker or other nominee, you will receive shares of GCI Group common stock through the same channels that you currently use to hold or trade shares of Liberty Broadband common stock, whether through a brokerage account, 401(k) plan or other channel, except no stockholder will receive physical certificates for their shares of GCI Group common stock. Receipt of shares of GCI Group common stock will be documented for you in the same manner that you typically receive stockholder updates, such as monthly broker statements and 401(k) statements.

 

49

 

If you own shares of Liberty Broadband common stock as of the record date for the distribution, 5:00 p.m. New York City time on [           ], 2025, including shares in certificated form, and if all of the conditions to the distribution are satisfied or, if permissible, waived, Liberty Broadband, with the assistance of the distribution agent, will electronically distribute shares of GCI Group common stock to you, your brokerage firm or your 401(k) plan on your behalf in book-entry form as follows:

•

Registered stockholders.   If you own your shares of Liberty Broadband common stock directly through Liberty Broadband’s transfer agent, [Broadridge Corporate Issuer Solutions, LLC], you are a registered stockholder. In this case, the distribution agent will credit the whole shares of GCI Group common stock you receive in the distribution by way of direct registration in book-entry form to a new account with our transfer agent. Book-entry form refers to a method of recording share ownership when no physical stock certificates are issued to stockholders, as is the case in the distribution. You will be able to access information regarding your book-entry account holding shares of GCI Group common stock at [Broadridge Corporate Issuer Solutions, LLC]. Commencing on or shortly after the distribution date, the distribution agent will mail to you an account statement that indicates the number of whole shares of GCI Group common stock that have been registered in book-entry form in your name. We expect it will take the distribution agent up to two weeks after the distribution date to complete the distribution of the shares of GCI Group common stock and mail statements of holding to all registered stockholders.

​

•

“Street name” or beneficial stockholders.   If you own your shares of Liberty Broadband common stock beneficially through a bank, broker or other nominee, including a 401(k) plan, the bank, broker or other nominee holds the shares in “street name” and records your ownership on its books. If you own your shares of Liberty Broadband common stock through a bank, broker or other nominee, your bank, broker or other nominee will credit your account with the whole shares of GCI Group common stock that you receive in the distribution on or shortly after the distribution date.

​

Holders of Liberty Broadband common stock are not required to vote on the separation, including the internal reorganization and distribution, but you are urged to read this entire prospectus carefully. You are not being asked for a proxy and you are not required to send a proxy to Liberty Broadband. You do not need to pay any consideration, exchange or surrender your existing shares of Liberty Broadband common stock or take any other action to receive your shares of GCI Group common stock to the extent you are entitled to receive such shares. Please do not send in your Liberty Broadband stock certificates.

Separately, a vote of holders of LBRDA, LBRDB and LBRDP was obtained to approve the adoption of the Charter merger agreement in connection with the Charter combination. Liberty Broadband had separately made available to holders of Liberty Broadband common stock and Liberty Broadband preferred stock a joint proxy statement/prospectus in connection with the vote and the issuance of shares of Charter capital stock in the merger.

Number of Shares You Will Receive

If all conditions to the distribution are satisfied or, if permissible, waived, on the distribution date, you will receive, subject to the declaration of the dividend for the distribution, (i) 0.20 of a share of Series A GCI Group common stock for each whole share of Liberty Broadband Series A common stock you hold as of the record date, (ii) 0.20 of a share of Series B GCI Group common stock for each whole share of Liberty Broadband Series B common stock you hold as of the record date, and (iii) 0.20 of a share of Series C GCI Group common stock for each whole share of Liberty Broadband Series C common stock you hold as of the record date.

Holders of Liberty Broadband common stock will not receive any fractional shares of GCI Group common stock in the distribution. Instead, each holder of record of shares of Liberty Broadband common stock who would otherwise have received a fraction of a share of GCI Group common stock pursuant to the distribution will receive cash in an amount of such holder’s pro rata share of the net proceeds from a sale by the distribution agent in the public market of the aggregate fractional shares of GCI Group common stock to be distributed in the distribution to such holders of record. A holder of Liberty Broadband common stock who holds their shares in street name should reach out to their broker or other nominee with any questions, as only DTC participants who would otherwise have received a fraction of a share of GCI Group

 

50

 

common stock pursuant to the distribution will receive cash in an amount of such DTC participant’s pro rata share of the net proceeds from a sale by the distribution agent in the public market of the aggregate fractional shares of GCI Group common stock to be distributed in the distribution to such DTC participants. As used herein, “DTC participant” is defined as brokers and other nominees that are participants in The Depositary Trust Company and hold shares in street name. No interest will be paid on any cash received in lieu of a fractional share. The receipt of cash in lieu of fractional shares will generally be taxable to the recipient stockholders to the extent the amount of cash received exceeds the tax basis of such fractional shares. See “U.S. Federal Income Tax Considerations.”

Internal Reorganization

The internal reorganization will result in GCI Liberty owning, directly or indirectly, GCI, LLC and the operations comprising, and the entities that conduct, the GCI Business. The internal reorganization is expected to include the contribution of all of the equity interests in GCI, LLC (which directly and indirectly conducts the GCI Business) to GCI Liberty in exchange for GCI Liberty stock, including shares of GCI Liberty non-voting preferred stock, and the assumption of certain liabilities related to the GCI Business.

Following the completion of the internal reorganization and prior to the completion of the distribution, GCI Liberty will be the parent company of the entities that conduct the GCI Business. The businesses and assets that will remain at Liberty Broadband following the separation will consist of the remainder of its businesses and assets not included in the internal reorganization or the distribution, including Liberty Broadband’s interest in Charter.

In addition, it is Liberty Broadband’s intention to enter into an agreement with a third party, pursuant to which Liberty Broadband will sell to such third party, following the completion of the contribution of the equity interests in GCI, LLC to GCI Liberty and prior to the distribution, all of the outstanding shares of GCI Liberty non-voting preferred stock.

Reclassification

As part of the separation, following the completion of the internal reorganization and prior to the completion of the distribution, GCI Liberty will amend and restate its articles of incorporation to, among other things, reclassify the shares of then-outstanding GCI Liberty common stock, all of which at such time will consist of 1,000 shares of GCI Liberty common stock, par value $0.01 (the “existing GCI Liberty common stock”), and be owned by Liberty Broadband, into shares of a new common stock to be designated as the GCI Group common stock (the “reclassification”). The GCI Group common stock will have three series, as described below. By amending and restating GCI Liberty’s articles of incorporation (the “GCI Liberty restated articles”), Liberty Broadband will also authorize a group of common stock to be designated the Ventures Group common stock, which may be issued in three series. No shares of Ventures Group common stock will be outstanding at the time of the separation.

The reclassification will be accomplished by amending and restating GCI Liberty’s articles of incorporation as described below and filing the GCI Liberty restated articles with the Nevada Secretary of State. All of the shares of existing GCI Liberty common stock, issued and outstanding at the time the GCI Liberty restated articles filed with the Nevada Secretary of State becomes effective, will, upon the effectiveness of the GCI Liberty restated articles, be automatically reclassified into approximately the following number of shares, based on the number of shares of each series of Liberty Broadband common stock outstanding as of [           ], 2025, in each case, multiplied by the distribution ratio, and, on a series by series basis, rounded up to the nearest share, with the exact number of shares to be determined as of the record date:

•

[      ] shares of Series A GCI Group common stock;

​

•

[      ] shares of Series B GCI Group common stock; and

​

•

[      ] shares of Series C GCI Group common stock.

​

The reclassification will not result in any change to the authorized or issued number of shares of GCI Liberty non-voting preferred stock.

 

51

 

Effect of the Reclassification

Immediately following the effective time of the reclassification (the “reclassification effective time”), the outstanding shares of GCI Liberty shall consist of shares of Series A GCI Group common stock, Series B GCI Group common stock, Series C GCI Group common stock and the GCI Liberty non-voting preferred stock.

Shares of GCI Group common stock delivered in the distribution will be registered in book-entry form. Book-entry form refers to a method of recording stock ownership when no physical share certificates are issued to stockholders.

The reclassification will become effective prior to the distribution on the distribution date.

Results of the Separation

Immediately following the separation, we will be an independent publicly traded company, and Liberty Broadband will not retain any ownership interest in us. Immediately following the separation, we expect to have approximately [    ] holders of shares of GLIBA, [    ] holders of shares of GLIBB and [    ] holders of shares of GLIBK, based on holders of record of the shares of each series of Liberty Broadband common stock outstanding as of [           ], 2025 (which amounts do not include the number of stockholders whose shares are held of record by banks, brokers or other nominees, but include each such institution as one holder), and one holder of shares of GCI Liberty non-voting preferred stock. A significant number of shares of Liberty Broadband common stock are held in either nominee name or street name brokerage accounts, and consequently, we are unable to determine the exact number of beneficial owners of GCI Group common stock.

There is currently no trading market for GCI Group common stock. Following the separation, we expect the Series A GCI Group common stock and Series C GCI Group common stock will be listed on the Nasdaq Global Select Market under the symbols “GLIBA” and “GLIBK,” respectively, and we expect the Series B GCI Group common stock will be quoted on the OTC Markets under the symbol “GLIBB.”

Before our separation from Liberty Broadband, we intend to enter into a separation and distribution agreement (the “separation and distribution agreement”) and certain other agreements with Liberty Broadband and Liberty Media related to the spin-off. These agreements will govern the relationship between us and Liberty Broadband up to and after completion of the separation, and the relationship between us and Liberty Media after completion of the separation, and allocate between us and Liberty Broadband various assets, liabilities, rights and obligations, including employee benefits, intellectual property and tax-related assets and liabilities. We describe these arrangements in greater detail under “Certain Relationships and Related Party Transactions — Agreements Relating to the Spin-Off.”

Conditions to the Distribution

The distribution is subject to the satisfaction or, if applicable, waiver, of the following conditions, subject to Liberty Broadband’s agreement to consummate the distribution pursuant to, and subject to the terms and conditions of, the Charter merger agreement and the separation and distribution agreement:

(1)

the receipt of the opinion of [           ] as to the solvency of Liberty Broadband and GCI Liberty immediately after giving effect to the distribution;

​

(2)

the effectiveness under the Securities Act of 1933, as amended (the “Securities Act”) of the GCI Liberty registration statement, of which this prospectus forms a part, relating to the registration of the shares of GCI Group common stock to be distributed in the distribution;

​

(3)

the effectiveness of the registration of the Series A GCI Group common stock and Series C GCI Group common stock under Section 12(b) of the Exchange Act;

​

(4)

the approval of Nasdaq for the listing of shares of Series A GCI Group common stock and Series C GCI Group common stock;

​

(5)

the approval of the OTC Markets for the quotation of shares of Series B GCI Group common stock;

​

 

52

 

(6)

the approval of applications by the (A) FCC required under the Communications Act and (B) RCA required by Alaska law for consent to the transfer of control of certain communications licenses held by GCI Liberty or its subsidiaries;

​

(7)

the expiration or granting of early termination of any waiting period (and any extension thereof), and any commitments not to close before a certain date under a timing agreement entered into with a governmental authority, applicable to any Liberty Broadband representative’s receipt of GCI Group common stock under the HSR Act;

​

(8)

the absence of any law or order entered, enacted, promulgated, enforced or issued by any court or other governmental authority of competent jurisdiction that has the effect of preventing, prohibiting, enjoining or rendering illegal the consummation of the separation, including the internal reorganization (including the preferred stock sale), the reclassification and the distribution;

​

(9)

the termination of all contracts, other than the separation and distribution agreement and certain other agreements referenced therein, between (x) any member of the Liberty Broadband group, on the one hand, and (y) any member of the Spinco group, on the other hand, in each case, without liability to the applicable parties;

​

(10)

the effectuation of the internal reorganization, including the preferred stock sale and further including the execution of all such instruments, assignments, documents and other agreements necessary to effect the internal reorganization, including the preferred stock sale; and

​

(11)

the receipt of any other regulatory or contractual approvals required to consummate the spin-off under applicable law or pursuant to any material contract to which any member of the Liberty Broadband group or Spinco group is a party.

​

The Company filed pro forma transfer of control applications with the FCC on March 26, 2025. Applications for RCA approval of the transfer on an indirect controlling interest in the GCI Liberty licensee subsidiaries were filed with the RCA on December 31, 2024. The RCA is expected to issue a final order regarding the applications no later than July 27, 2025.

Liberty Broadband may waive the fifth, seventh and/or eleventh condition set forth above; provided, that, to the extent the Charter merger agreement has not been terminated, the eleventh condition set forth above will require the waiver of Charter. The remaining conditions set forth above are non-waivable. In the event Liberty Broadband (and with respect to the eleventh condition if the Charter merger agreement has not been terminated, Charter) waives the fifth, seventh and/or eleventh condition to the separation, Liberty Broadband intends to promptly issue a press release and file a Current Report on Form 8-K to report such event.

Indemnification Obligations

The separation and distribution agreement provides for mutual indemnification obligations between Liberty Broadband and GCI Liberty, pursuant to which (a) GCI Liberty indemnifies Liberty Broadband for all losses incurred by Liberty Broadband to the extent arising out of or resulting from or in connection with any of the following (i) the businesses, assets and liabilities, in each case, contributed to GCI Liberty in the internal reorganization (whether before, on or after the closing of the distribution), (ii) any breach of, or failure to perform or comply with, any covenant, undertaking or obligation of any member of the Spinco group under the separation and distribution agreement or other agreements referenced therein or (iii) any untrue statement of material fact in this registration statement or other disclosure document filed with the SEC in connection with the distribution (other than those untrue statements of material fact made by Liberty Broadband or for which Liberty Broadband provided information in writing), or Liberty Broadband’s disclosure documents filed with the SEC prior to the effective time of the distribution for which the applicable disclosure relates to any member of the Spinco group or for which the Spinco group or its predecessors provided information in writing and (b) Liberty Broadband indemnifies GCI Liberty for all losses incurred by GCI Liberty to the extent arising out of or resulting from or in connection with any of the following (i) the businesses, assets and liabilities, in each case, retained by Liberty Broadband in the internal reorganization (whether before, on or after the closing of the distribution), (ii) any breach of, or failure to perform or comply

 

53

 

with, any covenant, undertaking or obligation of any member of the Liberty Broadband group under the separation and distribution agreement or other agreements referenced therein and (iii) any untrue statement of material fact in this registration statement where such untrue statement of material fact is made by Liberty Broadband or for which Liberty Broadband provided information in writing, or Liberty Broadband’s disclosure documents filed with the SEC prior to the effective time of the distribution (other than those untrue statements of material fact that arise out of disclosures in such disclosure documents filed with the SEC relating to the Spinco group or for which Spinco group or its predecessors provided information in writing). At the completion of the Charter combination, in accordance with the Charter merger agreement, Charter will execute a joinder agreement to the separation and distribution agreement, pursuant to which, from and after the closing of the Charter combination, Charter will be directly responsible and liable for Liberty Broadband’s obligations under the separation and distribution agreement, including Liberty Broadband’s indemnification obligations. These indemnification obligations exclude any matters relating to taxes. For a description of the allocation of tax-related obligations, please see “Certain Relationships and Related Party Transactions — Agreements Relating to the Spin-Off — Tax Sharing Agreement” and “— Tax Receivables Agreement.”

Accounting Treatment

Liberty Broadband and GCI Liberty prepare their financial statements, respectively, in accordance with GAAP. The spin-off will be accounted for at historical cost due to the fact that GCI Group common stock will be distributed pro rata to holders of Liberty Broadband common stock on the record date for the distribution.

No Appraisal Rights

Holders of Liberty Broadband common stock are not entitled to appraisal rights in connection with the spin-off.

Dividend Policy

GCI Liberty currently intends to retain future earnings, if any, to finance the expansion of its business. As a result, it does not expect to pay any cash dividends in the foreseeable future other than pursuant to the terms of the GCI Liberty non-voting preferred stock. All decisions regarding the payment of dividends by GCI Liberty will be made by the GCI Liberty board, from time to time, in accordance with applicable law.

Stock Exchange Listings

GCI Liberty expects to list the shares of Series A GCI Group common stock and Series C GCI Group common stock on the Nasdaq Global Select Market under the symbols “GLIBA” and “GLIBK.” GCI Liberty currently expects that the shares of Series B GCI Group common stock will be quoted on the OTC Markets under the symbol “GLIBB.” GCI Liberty cannot assure you as to the trading price of any series of common stock after the separation. The approval of Nasdaq for the listing of GLIBA and GLIBK common stock is a condition to the distribution which may not be waived by the Liberty Broadband board. The approval of the OTC Markets of the quotation of shares of Series B GCI Group common stock is a condition to the distribution which may be waived by the Liberty Broadband board. GCI Liberty cannot predict the trading prices for its common stock before, on or after the distribution date.

Transferability of Shares You Receive

The shares of GCI Group common stock that will be distributed in connection with the distribution will be transferable without registration under the Securities Act, except for shares received by persons who may be deemed to be GCI Liberty affiliates. Persons who may be deemed to be GCI Liberty affiliates after the distribution generally include individuals or entities that control, are controlled by or are under common control with GCI Liberty, which may include certain of GCI Liberty’s executive officers or directors. Securities held by GCI Liberty affiliates will be subject to resale restrictions under the Securities Act. GCI Liberty affiliates will be permitted to sell shares of GCI Group common stock only pursuant to an effective

 

54

 

registration statement or an exemption from the registration requirements of the Securities Act, such as the exemption afforded by Rule 144 under the Securities Act.

Treatment of Liberty Broadband Equity Awards

Certain current and former employees, nonemployee directors and consultants of Liberty Broadband and its subsidiaries have been granted Liberty Broadband options, Liberty Broadband restricted shares and Liberty Broadband RSUs pursuant to various stock incentive plans of Liberty Broadband. Holders of Liberty Broadband RSUs who are GCI employees will receive, in substitution for such Liberty Broadband RSUs, RSUs that relate to Series C GCI Group common stock, with the number of shares of Series C GCI Group common stock subject to such substituted RSU being determined in a manner to preserve the value of the Liberty Broadband RSU outstanding prior to the distribution. All Liberty Broadband RSUs held by individuals other than GCI employees and all Liberty Broadband options, none of which are held by GCI employees, will be adjusted in connection with the distribution to preserve the value of such outstanding Liberty Broadband RSU or Liberty Broadband option, as applicable, prior to the distribution, but will continue to relate to the applicable series of Liberty Broadband common stock. The adjustments made to Liberty Broadband options will also be done in a manner to preserve the ratio of the exercise price to the market price of such Liberty Broadband option prior to the distribution. Any fractional shares resulting from the adjustments to the Liberty Broadband RSUs will be paid in cash (with no interest), subject to applicable tax withholding.

Holders of Liberty Broadband restricted shares outstanding as of the record date will continue to hold their Liberty Broadband restricted shares and will participate in the distribution, with shares of Series C GCI Group common stock received in connection therewith remaining restricted and generally subject to the same terms and conditions of the Liberty Broadband restricted shares. Any fractional shares resulting from the distribution will be paid in cash (with no interest), subject to applicable tax withholding.

Liberty Broadband RSUs Held by GCI Employees

Liberty Broadband has the ability to accelerate ten business days prior to the completion of the separation the vesting of a prorated portion of each Liberty Broadband RSU that was outstanding as of November 12, 2024, that remains outstanding as of ten business days prior to the completion of the separation and that is held by a GCI employee (other than such Liberty Broadband RSUs that, by their terms as in effect as of November 12, 2024, would not have vested as of June 30, 2027) and to settle such accelerated Liberty Broadband RSUs prior to the completion of the distribution in the shares of Liberty Broadband Series C common stock underlying the vested portion of such Liberty Broadband RSU. Such shares of Liberty Broadband Series C common stock, after any applicable tax withholding, will be treated in the same manner as an outstanding share of Liberty Broadband Series C common stock as described above in “— When and How You Will Receive Shares of GCI Group Common Stock.”

Each Liberty Broadband RSU that remains outstanding as of the distribution date that is held by a GCI employee will be substituted with a RSU relating to Series C GCI Group common stock (as substituted, “GCI Liberty RSUs”) based on (1) the sum of (i) the value of Liberty Broadband Series C common stock following the distribution plus (ii) the product of the value of Series C GCI Group common stock following the distribution multiplied by 0.20 compared to (2) the value of Series C GCI Group common stock following the distribution. Any fractional shares resulting from the substitution will be paid in cash (with no interest), subject to applicable tax withholding.

Except as otherwise described above, GCI Liberty RSUs will generally have the same terms (including the vesting requirements) as those of the substituted Liberty Broadband RSU, as applicable, immediately prior to the distribution. The GCI Liberty RSUs will be issued pursuant to the GCI Liberty Transitional Stock Adjustment Plan (the “transitional plan”), the form of which will be filed with the SEC as an exhibit to this Registration Statement on Form S-1. The transitional plan will govern the terms and conditions of the GCI Liberty RSUs and, as described below, the GCI Liberty restricted shares, but will not be used to make any grants following the separation.

 

55

 

Liberty Broadband Stock Options

Each Liberty Broadband option outstanding as of the distribution date will continue to relate to shares of the applicable series of Liberty Broadband common stock immediately following the distribution, but with adjustments made to the number of shares and applicable exercise price (as adjusted, an “adjusted Liberty Broadband option”) based on (1) the sum of (i) the value of Liberty Broadband Series C common stock following the distribution plus (ii) the product of the value of the Series C GCI Group common stock following the distribution multiplied by 0.20 compared to (2) the value of Liberty Broadband Series C common stock following the distribution.

Except as otherwise described herein, adjusted Liberty Broadband options will have the same terms (including the vesting requirements) as those of the corresponding Liberty Broadband option immediately prior to the distribution. The adjusted Liberty Broadband options will remain subject to the Liberty Broadband incentive plan pursuant to which they were granted.

Liberty Broadband Restricted Shares

Each Liberty Broadband restricted share that is outstanding as of the record date, in addition to being retained by the holder, will entitle the holder thereof to participate in the distribution and, subject to the declaration of the dividend for the distribution, receive 0.20 of a share of Series C GCI Group common stock, with cash paid in lieu of any resulting fractional shares (with no interest), subject to applicable tax withholding. Except as otherwise described herein, such shares of Series C GCI Group common stock (“GCI Liberty restricted shares”) will have the same terms (including the vesting requirements) as those of the corresponding Liberty Broadband restricted share immediately prior to the distribution. The GCI Liberty restricted shares will be issued pursuant to the transitional plan. Each Liberty Broadband restricted share will continue to have the same terms (including vesting requirements) and will remain subject to the Liberty Broadband incentive plan pursuant to which it was granted.

Liberty Broadband RSUs (Other than Those Held by GCI Employees)

Each Liberty Broadband RSU outstanding as of the distribution date that is held by an individual other than a GCI employee will continue to relate to shares of Liberty Broadband common stock immediately following the distribution, but with adjustments made to the number of shares (as adjusted, an “adjusted Liberty Broadband RSU”) based on (1) the sum of (i) the value of Liberty Broadband Series C common stock following the distribution plus (ii) the product of the value of Series C GCI Group common stock following the distribution multiplied by 0.20 compared to (2) the value of Liberty Broadband Series C common stock following the distribution, with cash paid in lieu of any resulting fractional shares (with no interest), subject to applicable tax withholding. Except as otherwise described herein, adjusted Liberty Broadband RSUs will have the same terms (including the vesting requirements) as those of the corresponding Liberty Broadband RSU immediately prior to the distribution. The adjusted Liberty Broadband RSUs will remain subject to the Liberty Broadband incentive plan pursuant to which they were granted.

Reasons for Furnishing this Prospectus

We are furnishing this prospectus solely to provide information to holders of Liberty Broadband common stock who will hold shares of Liberty Broadband common stock on the record date for the distribution and who will receive shares of GCI Group common stock in the distribution. You should not construe this prospectus as an inducement or encouragement to buy, hold or sell any of our securities or any securities of Liberty Broadband. We believe that the information contained in this prospectus is accurate as of the date set forth on the cover. Changes to the information contained in this prospectus may occur after that date, and neither we nor Liberty Broadband undertakes any obligation to update the information except in the normal course of our and Liberty Broadband’s public disclosure obligations and practices and except as required by applicable law.

 

56

 

U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following discussion summarizes the U.S. federal income tax considerations of (i) the distribution by Liberty Broadband of shares of GCI Group common stock to holders of Liberty Broadband common stock pursuant to the distribution, and (ii) the ownership and disposition of GCI Group common stock by stockholders that receive such stock in the distribution. This discussion is limited to holders of Liberty Broadband common stock and holders of GCI Group common stock who hold such stock as a “capital asset” within the meaning of the Code (generally, property held for investment). This discussion is based on the Code, applicable Treasury regulations, judicial interpretations thereof, and administrative rulings and practice, all as in effect as of the date hereof, and all of which are subject to change or differing interpretations, possibly with retroactive effect. Any such change or interpretation could affect the accuracy of the statements and conclusions set forth herein.

This discussion does not purport to address all aspects of U.S. federal income taxation that may be relevant to particular investors in light of their particular facts and circumstances, nor does it apply to investors subject to special rules under the U.S. federal income tax laws (including, for example, banks or other financial institutions, insurance companies, regulated investment companies, real estate investment trusts, mutual funds, dealers in securities or currencies, traders in securities that elect to apply a mark-to-market method of accounting, tax-exempt entities, entities or arrangements treated as partnerships for U.S. federal income tax purposes or other flow-through entities (and investors therein), subchapter S corporations, retirement plans, individual retirement accounts or other tax-deferred accounts, holders liable for any alternative minimum tax, holders having a “functional currency” other than the U.S. dollar, holders who hold shares of Liberty Broadband common stock or GCI Group common stock as part of a straddle, constructive sale, conversion transaction or other integrated or risk reduction transaction, holders required to accelerate the recognition of any item of gross income as a result of such income being recognized on an applicable financial statement, holders that actually or constructively hold 5% or more of the shares of Liberty Broadband capital stock, U.S. expatriates, foreign pension funds, controlled foreign corporations, passive foreign investment companies, and holders who acquired their shares of Liberty Broadband common stock through the exercise of an employee stock option or otherwise as compensation, in connection with the performance of services, or through a retirement plan). This discussion does not address any considerations under any state, local, non-income, or non-U.S. tax laws, nor does it address any alternative minimum tax or tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010. Except as specifically set forth below, this summary does not discuss applicable income tax reporting requirements. Investors should consult their tax advisors regarding such matters.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of shares of Liberty Broadband common stock or GCI Group common stock, as applicable, that, for U.S. federal income tax purposes, is:

•

an individual who is a citizen or resident of the United States;

​

•

a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;

​

•

an estate the income of which is subject to U.S. federal income tax regardless of its source; or

​

•

a trust (i) that is subject to the primary supervision of a court within the United States and all of the substantial decisions of which are controlled by one or more U.S. persons, or (ii) that has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person for U.S. federal income tax purposes.

​

A “non-U.S. holder” is a beneficial owner of shares of Liberty Broadband common stock or GCI Group common stock, as applicable, that is neither a U.S. holder nor an entity or arrangement treated as a partnership for U.S. federal income tax purposes.

If a partnership (or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) receives GCI Group common stock, the tax treatment of a partner in such partnership generally will depend on the status of the partner and the activities of the partnership. Partners of partnerships that

 

57

 

receive GCI Group common stock should consult their tax advisors with respect to the particular tax considerations applicable to them.

THE FOLLOWING IS ONLY A SUMMARY OF THE U.S. FEDERAL INCOME TAX CONSIDERATIONS GENERALLY APPLICABLE TO THE DISTRIBUTION AND THE OWNERSHIP AND DISPOSITION OF GCI GROUP COMMON STOCK. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR U.S. FEDERAL INCOME TAX CONSEQUENCES APPLICABLE TO THEM, AS WELL ANY ESTATE, GIFT, STATE, LOCAL, OR NON-U.S. TAX CONSEQUENCES RESULTING FROM THE DISTRIBUTION OR THE OWNERSHIP AND DISPOSITION OF GCI GROUP COMMON STOCK.

U.S. Federal Income Tax Characterization of the Distribution

For U.S. federal income tax purposes, the distribution will not be eligible for treatment as a tax-deferred distribution by Liberty Broadband with respect to its common stock. Accordingly, the distribution will generally be treated as a fully taxable transaction to Liberty Broadband and holders of Liberty Broadband common stock. The discussion below describes the U.S. federal income tax considerations of the receipt of GCI Group common stock by holders of Liberty Broadband common stock in the distribution.

As described in the joint proxy statement/prospectus separately made available by Liberty Broadband in connection with the vote and the issuance of shares of Charter capital stock in the Charter combination, Liberty Broadband and Charter intend that the Charter combination will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and it is a condition to each of Liberty Broadband’s and Charter’s obligation to complete the combination that it receive a written opinion from Skadden, Arps, Slate, Meagher & Flom LLP and Wachtell, Lipton, Rosen & Katz, respectively, to the effect that the combination will so qualify. Liberty Broadband and Charter intend to take the position that, for U.S. federal income tax purposes, the distribution and the Charter combination are, together, part of a single, integrated “plan of reorganization” within the meaning of the Code and applicable Treasury regulations, such that the GCI Group common stock distributed in the distribution is treated as property received by holders of Liberty Broadband common stock pursuant to the plan of reorganization with respect to the Charter combination.

This position is not dispositive with respect to the U.S. federal income tax treatment of the distribution. No ruling from the IRS has been or will be requested with respect to such treatment, and there can be no assurance that the IRS will not assert (or that a court would not sustain) a contrary treatment.

If the IRS were to disagree with the intended U.S. federal income tax treatment of the distribution, or if the Charter combination were not to occur, the U.S. federal income tax consequences of the distribution to holders of Liberty Broadband common stock could be materially different than those set forth herein. In such case, the distribution could be treated as a taxable, non-redemptive distribution of shares of GCI Group common stock by Liberty Broadband to holders of Liberty Broadband common stock, with the amount of the distribution generally equal to the fair market value of such shares of GCI Group common stock. Such a distribution would generally be taxable as a dividend to such stockholders to the extent of (i) Liberty Broadband’s current earnings and profits for the taxable year in which the distribution occurs, and (ii) Liberty Broadband’s accumulated earnings and profits. Any amount of the distribution in excess of such earnings and profits would generally be treated as a return of capital to the extent of a stockholder’s tax basis in its Liberty Broadband common stock, and as capital gain thereafter. If the distribution were to be treated as a dividend for U.S. federal income tax purposes, the distribution of shares of GCI Group common stock to a non-U.S. holder would generally be subject to withholding of U.S. federal income tax from the gross amount of the distribution at a rate of 30% (or a reduced rate under an applicable income tax treaty), unless effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States. The remainder of this discussion assumes that the Charter combination will occur and that the GCI Group common stock distributed in the distribution will be treated as property received pursuant to the “plan of reorganization” with respect to the Charter combination.

Holders of Liberty Broadband common stock should consult their tax advisors regarding the tax consequences to them of the distribution, including potential characterizations of the distribution if the Charter combination does not occur.

 

58

 

Receipt of GCI Group Common Stock by U.S. Holders of Liberty Broadband Common Stock Pursuant to the Distribution

Receipt of GCI Group Common Stock by U.S. Holders of Liberty Broadband Common Stock That Receive Charter Class A Common Stock in the Charter Combination

The receipt of shares of GCI Group common stock in the distribution by a U.S. holder with respect to shares of Liberty Broadband common stock that the U.S. holder subsequently exchanges for shares of Charter Class A common stock pursuant to the Charter combination (referred to herein as a “participating U.S. holder”) is generally expected to be treated as the receipt of “other property” under Section 356 of the Code.

A participating U.S. holder is expected to recognize gain (but not loss) with respect to the shares of GCI Group common stock received in the distribution in an amount generally equal the lesser of (i) the amount by which the sum of the fair market value of the shares of Charter Class A common stock received pursuant to the Charter combination (including any fractional shares deemed received and sold for cash) and the fair market value of the shares of GCI Group common stock received in the distribution (including any fractional shares deemed received and sold for cash), in each case with respect to the stockholder’s Liberty Broadband common stock, exceeds the stockholder’s tax basis in such Liberty Broadband common stock, and (ii) the fair market value of the GCI Group common stock received in the distribution (including any fractional shares deemed received and sold for cash) with respect to such Liberty Broadband common stock.

For purposes of determining the U.S. federal tax consequences of the internal reorganization and the distribution, Liberty Broadband and GCI Liberty have agreed to value the shares of GCI Group common stock distributed in the distribution based on the volume-weighted average price of such stock over the first 20 trading days following the commencement of regular way trading. This valuation is not binding on the IRS, and it is possible that the IRS could assert that the shares of GCI Group common stock distributed in the distribution have a higher value than that resulting from the methodology agreed to by Liberty Broadband and GCI Liberty.

It is expected that the distribution will occur in a taxable year prior to the taxable year in which the Charter combination is completed, and a participating U.S. holder may need to determine the tax treatment of the receipt of shares of GCI Group common stock in the distribution before it is possible to ascertain the fair market value of the shares of Charter Class A common stock to be received in the Charter combination. There is limited guidance regarding the proper treatment of the receipt of “other property” in these circumstances. Participating U.S. holders may be able to take the position that the receipt of shares of GCI Group common stock in the distribution is treated as an “open transaction” pending the closing of the Charter combination, such that the recognition of any gain with respect to such GCI Group common stock is deferred until the amount of such gain can be definitively determined when the Charter combination is completed. It is the position of the IRS, however, that open transaction treatment is appropriate only in “rare and extraordinary cases,” and other treatments are possible. For example, a participating U.S. holder may be able to take the position (or the IRS may otherwise assert) that the shares of Charter Class A common stock to be received in the Charter combination should be valued based on the trading price of such stock on the date of the distribution for purposes of determining the amount of gain recognized in connection with the distribution or, alternatively, that the stockholder should recognize gain equal to the full value of the GCI Group common stock received in the distribution (irrespective of the value ultimately determined for the Charter Class A common stock received pursuant to the Charter combination). Participating U.S. holders should consult their tax advisors regarding the U.S. federal income tax consequences to them of the receipt of GCI Group common stock in the distribution.

Any gain recognized by a participating U.S. holder upon the receipt of shares of GCI Group common stock in the distribution (including any fractional shares deemed received and sold for cash) will generally be capital gain if the receipt of such shares results in a “meaningful reduction” ​(determined according to the applicable principles of Section 302 of the Code, as described below under “Receipt of GCI Group Common Stock by U.S. Holders of Liberty Broadband Common Stock That Do Not Receive Charter Class A Common Stock in the Charter Combination” below) in the stockholder’s percentage ownership in Charter relative to what the stockholder’s percentage ownership in Charter would have been if (i) the participating U.S. holder

 

59

 

had received solely shares of Charter Class A common stock (rather than a combination of GCI Group common stock and Charter Class A common stock) with respect to the stockholder’s Liberty Broadband common stock pursuant to the distribution and the Charter combination, and (ii) a portion of such Charter Class A common stock with a value equivalent to the shares of GCI Group common stock received in the distribution (including any fractional shares deemed received and sold for cash) had been redeemed immediately after the Charter combination. Such capital gain will constitute long-term capital gain if the participating U.S. holder’s holding period for its shares of Liberty Broadband capital stock exceeds one year. Long-term capital gains recognized by non-corporate participating U.S. holders are generally subject to U.S. federal income tax at a reduced rate of tax.

Liberty Broadband and Charter have agreed to treat the receipt of shares of GCI Group common stock by a participating U.S. holder as “other property” described in Section 356 of the Code to which Section 356(a)(2) of the Code does not apply, and therefore as meeting the requirements for treatment as a capital gain transaction (as described below under “Receipt of GCI Group Common Stock by U.S. Holders of Liberty Broadband Common Stock That Do Not Receive Charter Class A Common Stock in the Charter Combination”) for purposes of determining whether any gain recognized by the stockholder is capital gain. However, this determination depends, in part, on a stockholder’s particular circumstances, and there can be no assurance that the IRS will not assert (or that a court would not sustain) a contrary treatment. To the extent the receipt of shares of GCI Group common stock by a participating U.S. holder does not meet the requirements for treatment as a capital gain transaction, all or a portion of the gain could be recharacterized as a dividend to the extent of (i) Liberty Broadband’s current earnings and profits for the taxable year in which the distribution occurs, and (ii) Liberty Broadband’s accumulated earnings and profits. Subject to certain exceptions, and provided certain holding period requirements are met, any such dividend income recognized by a non-corporate participating U.S. holder with respect to the distribution would generally constitute a “qualified dividend” subject to tax at the applicable tax rate accorded to long-term capital gains. Any such dividend income recognized by a corporate participating U.S. holder may qualify for the dividends received deduction if the requisite holding period is satisfied.

A participating U.S. holder’s tax basis in the shares of GCI Group common stock received in the distribution (including any fractional shares deemed received and sold for cash) will generally equal the fair market value of such shares on the date of the distribution, and the holding period for such shares will begin the day after the date of the distribution.

If a participating U.S. holder acquired different blocks of shares of Liberty Broadband common stock at different times or at different prices, any gain recognized with respect to the stockholder’s Liberty Broadband common stock will be determined separately with respect to each block of shares of Liberty Broadband common stock. Any such stockholder should consult its tax advisor regarding the manner in which shares of GCI Group common stock received in the distribution should be allocated among different blocks of shares of Liberty Broadband common stock.

A participating U.S. holder that receives cash in lieu of a fractional share of GCI Group common stock will generally be treated as having received the fractional share pursuant to the distribution, and then as having sold such fractional share for cash. As a result, the participating U.S. holder will generally recognize short-term capital gain or loss equal to the difference, if any, between the amount of cash received and the tax basis of such fractional share (determined as described above).

Receipt of GCI Group Common Stock by U.S. Holders of Liberty Broadband Common Stock That Do Not Receive Charter Class A Common Stock in the Charter Combination

If, following the receipt of shares of GCI Group common stock in the distribution and prior to the Charter combination, a U.S. holder disposes of its shares of Liberty Broadband capital stock and does not exchange such shares for shares of Charter Class A common stock in the Charter combination (referred to herein as a “non-participating U.S. holder”), the non-participating U.S. holder may be treated as either (i) receiving such shares of GCI Group common stock in a redemption of a portion of the stockholder’s Liberty Broadband common stock in a transaction governed by Section 302 of the Code, or (ii) receiving a non-redemptive distribution of shares of GCI Group common stock from Liberty Broadband.

 

60

 

Liberty Broadband intends to take the position that the receipt of shares of GCI Group common stock by a non-participating U.S. holder is treated as a redemption of a portion of the stockholder’s Liberty Broadband common stock in a transaction governed by Section 302 of the Code, although there can be no assurance that the IRS will not assert (or that a court would not sustain) a contrary treatment. The remainder of this discussion assumes that such treatment will apply.

Under Section 302 of the Code, a redemption is treated as a sale or exchange of stock for U.S. federal income tax purposes (rather than as a distribution) that generally gives rise to capital gain or loss if the redemption (i) is “substantially disproportionate” with respect to the holder of the stock treated as redeemed, (ii) results in a “complete termination” of such stockholder’s interest in the issuing corporation, or (iii) is “not essentially equivalent to a dividend” with respect to such stockholder. A redemption will be substantially disproportionate with respect to a stockholder if, among other requirements, the percentage of voting stock actually and constructively owned by the stockholder immediately following the redemption is less than 80% of the percentage of the issued and outstanding voting stock actually and constructively owned by the stockholder immediately before the redemption. There will be a complete termination of a stockholder’s interest if either (i) all of the shares of stock actually and constructively owned by the stockholder are redeemed, or (ii) all of the shares of stock actually owned by the holder are redeemed and the stockholder is eligible to waive, and effectively waives in accordance with specific rules, the attribution of stock owned by certain family members and does not constructively own any other stock. A redemption will generally be treated as not essentially equivalent to a dividend if the redemption results in a “meaningful reduction” of the stockholder’s proportionate interest in the issuing corporation. Whether a redemption results in a meaningful reduction in a stockholder’s proportionate interest depends on the particular facts and circumstances; however, the IRS has indicated in a published ruling that even a small reduction in the proportionate interest of a small minority stockholder in a publicly held corporation who exercises no control over corporate affairs may constitute such a meaningful reduction. Dispositions of stock by a stockholder as part of a plan that includes a redemption may be taken into account in determining whether these tests are satisfied. If a redemption is not treated as a sale or exchange of the redeemed stock under any of the tests described above, the holder of such stock is treated as receiving a distribution from the issuing corporation, which is generally taxable as a dividend to the extent of the corporation’s current and accumulated earnings and profits.

Under the tests described above, a disposition of Liberty Broadband common stock following the distribution and prior to the Charter combination is generally expected to cause a non-participating U.S. shareholder’s receipt of shares of GCI Group common stock in the distribution (including any fractional shares deemed received and sold for cash) to be treated as a sale or exchange of a portion of the stockholder’s Liberty Broadband common stock having a value equal to the fair market value of the shares of GCI Group common stock received in the distribution. A non-participating U.S. holder will generally recognize capital gain or loss on such deemed sale or exchange equal to the difference between (i) the fair market value of the shares of GCI Group common stock received in the distribution (including any fractional shares deemed received and sold for cash), and (ii) the non-participating U.S. holder’s adjusted tax basis in the shares of Liberty Broadband common stock deemed exchanged. The non-participating U.S. holder’s adjusted tax basis in its shares of Liberty Broadband common stock will be reduced by the amount of adjusted tax basis described in clause (ii) of the preceding sentence. Such capital gain or loss will constitute long-term capital gain or loss if the non-participating U.S. holder’s holding period for its shares of Liberty Broadband capital stock exceeds one year. Long-term capital gains recognized by non-corporate non-participating U.S. holders are generally subject to U.S. federal income tax at a reduced rate of tax. The deductibility of capital losses is subject to limitations.

If, contrary to the position Liberty Broadband intends to take, the receipt of shares of GCI Group common stock by a non-participating U.S. holder were treated as a non-redemptive distribution of shares of GCI Group common stock from Liberty Broadband, the distribution would generally be taxable as a dividend to the non-participating U.S. holder to the extent of (i) Liberty Broadband’s current earnings and profits for the taxable year in which the distribution occurs, and (ii) Liberty Broadband’s accumulated earnings and profits. Any amount of the distribution in excess of such earnings and profits would generally be treated as a return of capital to the extent of the stockholder’s tax basis in its Liberty Broadband common stock, and as capital gain thereafter. Subject to certain exceptions, and provided certain holding period requirements are met, any such dividend income recognized by a non-corporate non-participating U.S.

 

61

 

holder with respect to the distribution would generally constitute a “qualified dividend” subject to tax at the applicable tax rate accorded to long-term capital gains. Any such dividend income recognized by a corporate non-participating U.S. holder may qualify for the dividends received deduction if the requisite holding period is satisfied.

A non-participating U.S. holder’s tax basis in the shares of GCI Group common stock received in the distribution (including any fractional shares deemed received and sold for cash) will generally equal the fair market value of such shares on the date of the distribution, and the holding period for such shares will begin the day after the date of the distribution.

If a non-participating U.S. holder acquired different blocks of shares of Liberty Broadband common stock at different times or at different prices, any gain or loss recognized with respect to the stockholder’s Liberty Broadband common stock will be determined separately with respect to each block of shares of Liberty Broadband common stock. Any such stockholder should consult its tax advisor regarding the manner in which shares of GCI Group common stock received in the distribution should be allocated among different blocks of shares of Liberty Broadband common stock.

A non-participating U.S. holder that receives cash in lieu of a fractional share of GCI Group common stock will generally be treated as having received the fractional share pursuant to the distribution, and then as having sold such fractional share for cash. As a result, the non-participating U.S. holder will generally recognize short-term capital gain or loss equal to the difference, if any, between the amount of cash received and the tax basis of such fractional share (determined as described above).

If, following the receipt of GCI Group common stock in the distribution and prior to the Charter combination, a U.S. holder disposes of some, but not all, of its shares of Liberty Broadband common stock, the stockholder should consult its tax advisor regarding the U.S. federal income tax treatment of the receipt of shares of GCI Group common stock in the distribution. It is possible that, in such circumstances, the shares of GCI Group common stock received by the U.S. holder with respect to the shares of Liberty Broadband common stock disposed of by the stockholder prior to the Charter combination could be treated as described above with respect to non-participating U.S. holders, with the remaining shares of GCI Group common stock received by the stockholder treated as described above under “Receipt of GCI Group Common Stock by U.S. Holders of Liberty Broadband Common Stock That Receive Charter Class A Common Stock in the Charter Combination.”

Receipt of GCI Group Common Stock by Non-U.S. Holders of Liberty Broadband Common Stock Pursuant to the Distribution

The receipt of shares of GCI Group common stock in the distribution by a non-U.S. holder with respect to shares of Liberty Broadband common stock that the non-U.S. holder subsequently exchanges for shares of Charter Class A common stock pursuant to the Charter combination is generally expected to be characterized for U.S. federal income tax purposes as described above under “U.S. Holders — Receipt of GCI Group Common Stock by U.S. Holders of Liberty Broadband Common Stock Pursuant to the Distribution —  Receipt of GCI Group Common Stock by U.S. Holders of Liberty Broadband Common Stock That Receive Charter Class A Common Stock in the Charter Combination.”

If, following the receipt of shares of GCI Group common stock in the distribution and prior to the Charter combination, a non-U.S. holder disposes of its shares of Liberty Broadband capital stock and does not exchange such shares for shares of Charter Class A common stock in the Charter combination, the receipt of GCI Group common stock by the non-U.S. holder in the distribution is generally expected to be characterized for U.S. federal income tax purposes as described above under “U.S. Holders — Receipt of GCI Group Common Stock by U.S. Holders of Liberty Broadband Common Stock Pursuant to the Distribution —  Receipt of GCI Group Common Stock by U.S. Holders of Liberty Broadband Common Stock That Do Not Receive Charter Class A Common Stock in the Charter Combination.”

Non-U.S. holders will generally not be subject to U.S. federal income or withholding tax on any capital gain recognized under Sections 356 and 302 of the Code (determined as described above with respect to participating U.S. holders and non-participating U.S. holders, as applicable) with respect to the receipt of shares of GCI Group common stock in the distribution, unless:

 

62

 

•

such gain is effectively connected with the conduct of a trade or business by the non-U.S. holder within the United States (and, if an applicable tax treaty so requires, is attributable to a U.S. permanent establishment or fixed base maintained by such holder);

​

•

the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year in which the distribution occurs and certain other conditions are met; or

​

•

Liberty Broadband is or has been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of the distribution or the period that the non-U.S. holder held its Liberty Broadband common stock, and the stockholder has owned, directly or constructively, more than 5% of the Liberty Broadband common stock at any time within the shorter of such periods.

​

Gain described in the first bullet point above will generally be subject to tax at generally applicable U.S. federal income tax rates as if the non-U.S. holder were a U.S. resident. Any gains of a corporate non-U.S. holder described in the first bullet point above may also be subject to an additional “branch profits tax” at a 30% rate (or lower applicable treaty rate). Gain described in the second bullet point above will generally be subject to a flat 30% U.S. federal income tax. Based on available information, Liberty Broadband does not believe it currently is, and does not expect to become, a United States real property holding corporation.

To the extent the receipt of shares of GCI Group common stock in the distribution (or any resulting gain) is treated as a dividend to a non-U.S. holder (including under the principles of Section 302 of the Code, as described above), the distribution of shares of GCI Group common stock to the non-U.S. holder would generally be subject to withholding of U.S. federal income tax from the gross amount of the dividend at a rate of 30% (or a reduced rate under an applicable income tax treaty), unless effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States. A withholding agent may satisfy any resulting withholding obligation by retaining and selling a portion of the shares of GCI Group common stock that would otherwise be distributed to the non-U.S. holder in the distribution and remitting the proceeds of such sale to the IRS. If the dividend is effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States (or, if a tax treaty applies, are attributable to a U.S. permanent establishment or fixed base maintained by the non-U.S. holder), the dividend will generally not be subject to U.S. withholding tax. Instead, the dividend will generally be subject to U.S. federal income tax at the same graduated individual or corporate rates applicable to U.S. holders and may also be subject to branch profits tax at a 30% rate (or lower applicable treaty rate). Because the proper characterization of the distribution depends on subsequent events and may not be determinable at the time that the distribution occurs, applicable withholding agents may protectively withhold from the distribution as if it were a dividend for U.S. federal income tax purposes.

Tax Considerations of the Ownership and Disposition of GCI Group Common Stock

U.S. Holders of GCI Group Common Stock

Distributions

Distributions of cash or other property (other than certain distributions of GCI Liberty stock or rights to acquire GCI Liberty stock) to U.S. holders of GCI Group common stock will generally constitute dividends for U.S. federal income tax purposes to the extent paid from GCI Liberty’s current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of GCI Liberty’s current and accumulated earnings and profits will generally constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. holder’s adjusted tax basis in its shares of GCI Group common stock. Any remaining excess will generally be treated as gain realized on the sale or other disposition of such shares, which will be treated as described below under “U.S. Holders of GCI Group Common Stock — Gain or Loss on Sale, Exchange, or Other Taxable Disposition of GCI Group Common Stock.”

Dividends paid to a U.S. holder that is a taxable corporation will generally qualify for the dividends received deduction if the requisite holding period is satisfied. With certain exceptions, and provided certain holding period requirements are met, dividends GCI Liberty pays to a non-corporate U.S. holder will

 

63

 

generally constitute “qualified dividends” that will be subject to tax at the applicable tax rate accorded to long-term capital gains.

Gain or Loss on Sale, Exchange, or Other Taxable Disposition of GCI Group Common Stock

A U.S. holder will generally recognize gain or loss on the sale, exchange, or other taxable disposition of shares of GCI Group common stock in an amount equal to the difference between (i) the sum of the amount of cash and the fair market value of any property received in such disposition, and (ii) the U.S. holder’s adjusted tax basis in such shares of GCI Group common stock.

Long-term capital gains recognized by non-corporate U.S. holders are generally subject to U.S. federal income tax at a reduced rate of tax. Capital gain or loss will constitute long-term capital gain or loss if the U.S. holder’s holding period for its shares of GCI Group common stock exceeds one year. The deductibility of capital losses is subject to various limitations that generally depend on each U.S. holder’s particular facts and circumstances.

Non-U.S. Holders of GCI Group Common Stock

Distributions

Distributions of cash or other property (other than certain distributions of GCI Liberty stock or rights to acquire GCI Liberty stock) to non-U.S. holders of GCI Group common stock will generally constitute dividends for U.S. federal income tax purposes to the extent paid from GCI Liberty’s current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Unless effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States, such dividends will be subject to withholding of U.S. federal income tax from the gross amount of the dividend at a rate of 30%, or a reduced rate under an applicable income tax treaty. To claim the benefits of a reduced treaty rate, a non-U.S. holder must provide to GCI Liberty or another applicable withholding agent a valid IRS Form W-8 (or applicable successor form) certifying the stockholder’s qualification for the reduced rate. Distributions in excess of current and accumulated earnings and profits will generally constitute a return of capital that will be applied against and reduce (but not below zero) the non-U.S. holder’s adjusted tax basis in its shares of GCI Group common stock. Any remaining excess will generally be treated as gain realized on the sale or other disposition of such shares, which will be treated as described below under “Non-U.S. Holders of GCI Group Common Stock — Gain or Loss on Sale, Exchange, or Other Taxable Disposition of GCI Group Common Stock.”

Dividends that are effectively connected with a non-U.S. holder’s conduct of a trade or business within the United States (or if a tax treaty applies, are attributable to a U.S. permanent establishment or fixed base maintained by the non-U.S. holder) will generally not be subject to U.S. withholding tax as described above, provided the non-U.S. holder complies with certain certification and disclosure requirements (usually by providing an IRS Form W-8ECI). Instead, such dividends will generally be subject to U.S. federal income tax, net of certain deductions, at the same graduated individual or corporate rates applicable to U.S. holders. If the non-U.S. holder is a corporation, dividends that are effectively connected income may also be subject to a “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty).

Gain or Loss on Sale, Exchange, or Other Taxable Disposition of GCI Group Common Stock

A non-U.S. holder will generally not be subject to U.S. federal income or withholding tax in respect of gain recognized on a sale, exchange, or other taxable disposition of GCI Group common stock, unless:

•

the gain is effectively connected with the conduct of a trade or business by the non-U.S. holder within the United States (and, if an applicable tax treaty so requires, is attributable to a U.S. permanent establishment or fixed base maintained by the non-U.S. holder);

​

•

the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met; or

​

 

64

 

•

GCI Liberty is or has been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. holder held GCI Group common stock, and, in the case where such stock is regularly traded on an established securities market, the non-U.S. holder has owned, directly or constructively, more than 5% of such stock at any time within the shorter of such periods.

​

Gain described in the first bullet point above will generally be subject to tax at generally applicable U.S. federal income tax rates as if the non-U.S. holder were a U.S. resident. Any gains of a corporate non-U.S. holder described in the first bullet point above may also be subject to an additional “branch profits tax” at a 30% rate (or lower applicable treaty rate). Gain described in the second bullet point above will generally be subject to a flat 30% U.S. federal income tax. Non-U.S. holders should consult their tax advisors regarding possible eligibility for benefits under income tax treaties.

A domestic corporation is generally classified as a United States real property holding corporation if the fair market value of its “United States real property interests” equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business, as determined for U.S. federal income tax purposes. GCI Liberty does not believe it currently is, and it does not expect to become, a United States real property holding corporation. If, contrary to such expectation, the third bullet point above were to apply to a non-U.S. holder, gain recognized by the non-U.S. holder on the sale, exchange, or other disposition of GCI Group common stock would be subject to tax at generally applicable U.S. federal income tax rates.

Information Reporting and Backup Withholding

The receipt of GCI Group common stock in the distribution, as well as dividends on and proceeds from the sale of GCI Group common stock (including payments of cash in lieu of fractional shares of GCI Group common stock), may be subject to information reporting, unless a stockholder provides proof of an applicable exemption. Such amounts may also be subject to backup withholding, unless a stockholder provides proof of an applicable exemption or furnishes its taxpayer identification number and otherwise complies with all applicable requirements of the backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or credit against a stockholder’s U.S. federal income tax liability, if any, provided that certain required information is timely furnished to the IRS.

 

65

 

USE OF PROCEEDS

We will not receive any proceeds from the distribution of the GCI Group common stock.

 

66

 

CAPITALIZATION

The following table sets forth GCI Liberty’s cash and cash equivalents and capitalization as of December 31, 2024 assuming the GCI Business had been transferred to GCI Liberty on December 31, 2024 but the reclassification and the distribution have not yet occurred. The table below should be read in conjunction with the accompanying historical combined financial statements of GCI Liberty, including the notes thereto.

(1)

[      ] shares of GCI Liberty non-voting preferred stock will be issued to Liberty Broadband in connection with the separation.

​

 

67

 

BUSINESS

GCI Liberty is currently a wholly owned subsidiary of Liberty Broadband. GCI Liberty’s businesses, assets and liabilities will initially consist of 100% of the outstanding equity interests in GCI, LLC and its subsidiaries. Immediately following the separation, we will be an independent publicly traded company, and Liberty Broadband will not retain any ownership interest in us.

The separation of GCI Liberty from Liberty Broadband is intended, among other things, to better position GCI Liberty to pursue opportunities for long-term growth and profitability unique to its own business and to enable it to more effectively implement its own distinct capital structure and capital allocation strategies. Additionally, the completion of the separation is a condition to the Charter combination under the Charter merger agreement. Accordingly, unless validly waived by Charter or unless Liberty Broadband determines in good faith, no later than December 31, 2025, that the separation is not reasonably capable of being achieved prior to June 30, 2027 on the agreed terms solely as a result of certain specified events, and Liberty Broadband and Charter mutually agree on an alternative to the separation, the Charter combination will not be completed unless and until the separation is completed. In connection with the separation, we expect to enter into certain agreements, including the separation and distribution agreement, the tax sharing agreement and the tax receivables agreement, with Liberty Broadband, pursuant to which, among other things, we and Liberty Broadband will indemnify each other against certain losses that may arise from, among other things, our respective businesses, assets and liabilities.

GCI, LLC, a wholly owned subsidiary of Liberty Broadband prior to the separation and a wholly owned subsidiary of GCI Liberty immediately following the separation, through its wholly owned subsidiary, GCI Holdings, provides a full range of data, wireless, video, voice, and managed services to residential customers, businesses, governmental entities, and educational and medical institutions primarily in Alaska under the GCI brand. Due to the unique nature of the markets it serves, including harsh winter weather and remote geographies, its customers rely extensively on its systems to meet their communication, public safety and entertainment needs.

Since its founding in 1979 as a competitive long-distance provider, GCI Holdings has consistently expanded its product portfolio and facilities to become the leading integrated communication services provider in markets it serves. Its facilities include redundant and geographically diverse digital undersea fiber optic cable systems linking its Alaska terrestrial networks to the networks of other carriers in the lower 48 contiguous states and a statewide wireless network.

Throughout its history, GCI Holdings has successfully added and expects to continue to add new products to its product portfolio. GCI Holdings has a demonstrated history of new product evaluation, development and deployment for its customers, and it continues to assess revenue-enhancing opportunities that create value for its customers. Where feasible and where economic analysis supports geographic expansion of its network coverage, it is currently pursuing or expects to pursue opportunities to increase the scale of its facilities, enhance its ability to serve existing customers’ needs and attract new customers. Additionally, due to the unique market conditions in Alaska, GCI Holdings, and in some cases its customers, participate in several federally (and to a lesser extent locally) subsidized programs designed to financially support the implementation and purchase of telecommunications services in high-cost areas. With these programs, GCI Holdings has been able to expand its network into previously undeveloped areas of Alaska and offer comprehensive communications services in many rural parts of the state where it would not otherwise be able to construct facilities within appropriate return-on-investment requirements. As part of GCI Holdings’ expansion initiatives, it actively pursues government grants designed to help fund rural expansion. In current and prior years, GCI Holdings has been awarded, as either the recipient or subrecipient, federal government grants to construct broadband infrastructure to unserved and underserved communities in rural Alaska. During the years ended December 31, 2024 and 2023, GCI Holdings was awarded a total of $30 million and $38 million, respectively, in federal grants.

 

68

 

GCI Holdings’ revenue was comprised of the following:

GCI Holdings sells new and enhanced services and products to its existing customer base to achieve increased revenue and penetration of its services. Through close coordination of its customer service and sales and marketing efforts, its customer service representatives suggest to its customers other services they can purchase or enhanced versions of services they already purchase. Many calls into the customer service centers or visits into one of the retail stores result in sales of additional services and products.

GCI Holdings has empowered its customer service representatives to handle most service issues and questions on a single call. GCI Holdings prioritizes its customer services to expedite handling of its most valuable customers’ issues, particularly for its largest commercial customers. GCI Holdings believes its integrated approach to customer service, including service set-up, programming various network databases with the customer’s information, installation, and ongoing service, allows it to provide a customer experience that fosters customer loyalty.

GCI Holdings continues to expand and evolve its integrated network for the delivery of its services. For its existing network, GCI Holdings’ bundled strategy and integrated approach to serving customers creates efficiencies of scale and maximizes network utilization. By offering multiple services, GCI Holdings is better able to leverage its network assets and increase returns on its invested capital. GCI Holdings periodically evaluates its network assets and continually monitors technological developments that it can potentially deploy to increase network efficiency and performance.

GCI Holdings holds a number of federally registered service marks used by its business. It owns two utility patents issued in 2017 pertaining to device diagnostics and network connectivity. The Communications Act gives the FCC the authority to license and regulate the use of the electromagnetic spectrum for radio communications. GCI Holdings holds licenses for its satellite and microwave transmission facilities for provision of long-distance services, and for its submarine cable landings. GCI Holdings holds various licenses for wireless spectrum. These licenses may be revoked and license renewal applications may be denied for cause. However, GCI Holdings expects these licenses to be renewed in due course when, at the end of the license period, a renewal application will be filed.

GCI Holdings has licenses for earth stations that are generally licensed for fifteen years. The FCC also issues a single blanket license for a large number of earth stations operating in specific frequency bands. Its operations may require additional licenses in the future.

GCI Holdings is certified through the RCA to provide local, long-distance, and video service by Certificates of Public Convenience and Necessity (“CPCN”). These CPCNs are nonexclusive certificates defining each authorized service area. Although CPCNs have no stated expiration date, they may be revoked due to cause.

Network Services Facilities.   GCI Holdings operates an advanced, diverse communications network providing data, mobile, video, voice, and managed services to consumer, business, government, and carrier customers throughout Alaska.

GCI Holdings serves urban and rural Alaska utilizing a combination of fiber, microwave, and satellite technologies. GCI Holdings has expanded its fiber network to the Aleutian Chain and is expanding it to the Bethel area and has launched urban-level service in the regions. GCI Holdings’ extensive use of microwave and satellite technologies also enables it to deliver connectivity to some of Alaska’s most remote communities.

GCI Holdings owns and operates a statewide wireless network providing voice and data services to Alaskans. Its statewide wireless network provides fifth generation (“5G”) data service, 4G Long Term

 

69

 

Evolution voice and data service, EVDO, 3G UMTS/HSPA+, 2G CDMA, and 2G GSM/EDGE service. It continues to expand and upgrade these services to provide a modern network for Alaska.

GCI Holdings’ dedicated internet access and suite of managed services, including voice, WiFi, firewall, detection and response operate on the highest-capacity backbone in Alaska, with numerous peering partners on the west coast. The availability and quality of service, as well as statistical information on traffic loading, are continuously monitored for quality assurance. The management platform has the capability to remotely access network elements and service end-points, permitting changes in configuration without the need to physically be at the service end-point. This management platform allows GCI Holdings to offer network monitoring and management services to businesses and governmental entities.

GCI Holdings’ video businesses are located throughout Alaska. Its facilities include hybrid-fiber-coax plant and head-end distribution equipment. The majority of its locations on the fiber routes are served from head-end distribution equipment in Anchorage. GCI Holdings has announced that it plans to exit the video business in 2025, subject to regulatory approvals.

Regulatory Matters

The following summary addresses the key regulatory and legislative developments affecting the cable industry and GCI Holdings’ services for both residential and commercial customers and the Enforcement Bureau of the FCC and related inquiries which may have a material adverse impact on GCI’s business, financial position, results of operations or liquidity. Cable systems and communications networks and services more generally are extensively regulated by the federal government (primarily the FCC), certain state governments and many local governments. A failure to comply with these regulations could subject GCI Holdings to substantial penalties. The following summary of regulatory issues does not purport to describe all existing and proposed federal, state, and local laws and regulations, or judicial and regulatory proceedings that affect these businesses. These businesses can be dramatically impacted by changes to the existing regulatory framework, whether triggered by legislative, administrative, or judicial rulings. Congress and the FCC have frequently revisited the subject of communications regulation and they are likely to do so again in the future. GCI Holdings could be materially disadvantaged in the future if it is subject to new laws, regulations or regulatory actions that do not equally impact key competitors. For example, Internet-delivered streaming video services compete with traditional video service, but they are not subject to the same level of federal, state, and local regulation. In addition, new Supreme Court decisions in 2024 may increase the likelihood that federal courts could vacate federal agency rules that would have been favorable or unfavorable to GCI Holdings’ business. Furthermore, as discussed under “Risk Factors,” the Supreme Court in 2025 will consider whether the federal system of universal service subsidies is constitutional, which could affect GCI Holdings’ revenue, as well as the contributions they pay to support federal universal service mechanisms. There is no assurance that the already extensive regulation of GCI Holdings’ business will not be expanded in the future.

Video Service and Products

General.   On November 8, 2024, GCI Holdings petitioned the RCA to discontinue its cable television/​video service. Depending on if and when the RCA approves the request, GCI Holdings plans to exit the video business in 2025.

Must Carry/Retransmission Consent

There are two alternative legal methods for carriage of local broadcast television stations on cable systems. Federal “must carry” regulations require cable systems to carry local broadcast television stations upon the request of the local broadcaster. Alternatively, federal law includes “retransmission consent” regulations, by which popular commercial television stations can prohibit cable carriage unless the cable operator first negotiates for “retransmission consent,” which may be conditioned on significant payments or other concessions. Popular stations routinely invoke “retransmission consent” and demand substantial compensation increases in their negotiations with cable operators, thereby significantly increasing operating costs. The current rules do not require any cable operator to carry multiple digital programming streams from a single broadcast television station, but should the FCC change this policy, additional cable capacity

 

70

 

would need to be devoted to carrying additional broadcast television programming streams, a step that could require the removal of other programming services.

Pole Attachments

The Communications Act requires investor-owned utilities to provide cable systems with access to poles and conduits upon reasonable, non-discriminatory terms and at rates that are subject to either federal or state regulation. Federal regulations, which apply in twenty-seven states, establish cost-based rental rates applicable to pole attachments used for cable or telecommunications services, including when offered together with Internet service, and at times establish mandatory timelines for processing pole access requests and limitations on make-ready costs that pole owners may charge for accommodating attachments. The FCC’s approach does not directly affect the rate in the twenty-three states that self-regulate, but many of those states have substantially the same rate for all communications attachments. The federal pole attachment law does not extend to poles owned by electric cooperatives or municipal electric companies, but states are free to regulate these entities, and many do. There can be challenges getting access to poles in rural areas where upfront construction and make ready costs can be higher and where pole owners may be slow to grant permit requests, especially when the FCC pole attachment rules do not apply or when FCC mandatory timelines do not apply, as is the case in most rural builds.

For the state of Alaska, in which GCI Holdings’ subsidiaries operate, the RCA does not use the federal formula and instead has adopted its own formula that has been in place since 1987. This formula could be subject to further revisions upon petition to the RCA. In addition, in 2011, the FCC adopted an order to rationalize different pole attachment rates among types of services, and in 2015, took further steps to bring telecommunications and cable pole attachment rates into parity. Though the general purpose of the rule changes was to ensure pole attachment rates as low and as uniform as possible, GCI Holdings does not expect the rules to have an impact on the terms under which it accesses poles. GCI Holdings cannot predict the likelihood of the RCA changing its formula, adopting the federal formula, or relinquishing its oversight of pole attachments to the FCC, any of which could increase the cost of its operations.

Other FCC Regulatory Matters related to Video Services

The Communications Act and FCC regulations cover a variety of additional areas applicable to GCI Holdings’ video services, including, among other things: (1) licensing of systems and facilities, including the grant of various spectrum licenses; (2) equal employment opportunity obligations; (3) customer service standards; (4) technical standards; (5) mandatory blackouts of certain network and syndicated programming; (6) restrictions on political advertising; (7) restrictions on advertising in children’s programming; (8) ownership restrictions; (9) posting of certain information on an FCC “public file” website, including but not limited to political advertising records, equal employment opportunity practices, compliance with children’s programming requirements, policies for commercial leased access, system information, and channel carriage information including disclosure of ownership interests in channels carried; (10) emergency alert systems; (11) inside wiring and contracts for MDU complexes; (12) accessibility of content, including requirements governing video-description and closed-captioning; (13) competitive availability of cable equipment; (14) the provision of up to 15% of video channel capacity for commercial leased access by unaffiliated third parties; (15) public, education and government entity access requirements; and (16) disclosure of an aggregated monthly “all-in” price on customer bills and advertising materials that include the price of video programming. Each of these regulations restricts GCI Holdings’ business practices to varying degrees and may impose additional costs on GCI Holdings’ operations.

It is possible that Congress or the FCC will expand or modify its regulation of cable systems or the services delivered over cable systems and competing services in the future. GCI Holdings cannot predict at this time what new requirements may be adopted and how such changes might impact their businesses.

Copyright

The carriage of television and radio broadcast signals by cable systems are subject to a federal compulsory copyright license. In exchange for filing certain reports and contributing a percentage of their revenue to a federal copyright royalty pool that varies depending on the size of the system, the number of distant broadcast television signals carried, and the location of the cable system, cable operators can

 

71

 

obtain blanket permission to retransmit copyrighted material included in broadcast signals. The copyright law provides copyright owners the right to audit payments under the compulsory license. On December 16, 2024, the Copyright Office issued an order modifying the license’s royalty calculations and reporting obligations, however, GCI Holdings does not believe the impact of such modifications will be material. The possible modification or elimination of this license is the subject of continuing legislative proposals and administrative review and could adversely affect GCI Holdings’ ability to obtain desired broadcast programming. Copyright clearances for non-broadcast programming services are arranged through private negotiations.

Franchise Matters

GCI Holdings’ cable systems generally are operated pursuant to nonexclusive franchises, permits, and similar authorizations granted by a municipality or other state or local government entity in order to utilize and cross public rights-of-way. Cable franchises generally are granted for fixed terms and in many cases include monetary penalties for noncompliance and may be terminable if the franchisee fails to comply. The specific terms and conditions of cable franchises vary significantly between jurisdictions. They generally contain provisions governing cable operations, franchise fees, access to and use of rights of way, system construction, maintenance, technical performance, customer service standards, supporting and carrying public, education and government access channels, and changes in the ownership of the franchisee. Although local franchising authorities have considerable discretion in establishing franchise terms, certain federal protections benefit cable operators. For example, federal law imposes a cap on franchise fees of 5% of gross revenue from the provision of cable services over the cable system. The FCC has clarified that the value of in-kind contribution requirements set forth in cable franchises is subject to the statutory cap on franchise fees, and it reaffirmed that state and local authorities are barred from imposing franchise fees on revenue derived from non-cable services, such as Internet services, provided by cable operators over cable systems.

A number of states have adopted franchising laws that provide for state-issued franchising. Generally, state-issued cable franchises are for a fixed term (or in perpetuity), streamline many of the traditional local cable franchise requirements and eliminate local negotiation and enforcement of terms. The RCA is the franchising authority for all of Alaska, and issues CPCNs for communities. GCI Holdings believes that it has generally met the terms of its CPCNs, which do not require periodic renewal. Military franchise requirements also affect its ability to provide video services to military bases.

Data Services and Products

General.   There is no one entity or organization that governs the global operation of the Internet. Each facilities-based network provider that is interconnected with the global Internet controls operational aspects of its own network. Certain functions, such as IP addressing, domain name routing, and the definition of the TCP/IP protocol, are coordinated by an array of quasi-governmental, intergovernmental, and non-governmental bodies. The legal authority of these bodies is not precisely defined.

The vast majority of users connect to the Internet over facilities of existing communications providers. Those communications providers are subject to varying levels of regulation at both the federal and state level. Thus, non-Internet-specific regulatory decisions exercise a significant influence over the economics of the Internet market.

Many aspects of the coordination and regulation of Internet activities and the underlying networks over which those activities are conducted are evolving. Internet-specific and non-Internet-specific changes in the regulatory environment, including changes that affect communications costs or increase competition from ILECs or other communications services providers, could adversely affect the costs and the prices for Internet-based services.

The FCC originally classified broadband Internet access services, such as those GCI Holdings offers, as an “information service,” which exempted the service from traditional communications common carrier laws and regulations. In 2015, the FCC reclassified broadband Internet access services as “telecommunications service” and, on that basis, imposed a number of “net neutrality” rules governing the provision of broadband service. In an order released in 2018, the FCC eliminated the 2015 rules, other than a transparency requirement that obligates GCI Holdings to disclose performance statistics and other service information to

 

72

 

consumers. In 2024, the FCC once again reclassified Internet access services as telecommunications services. The industry challenged the Order in court, and on January 2, 2025, the Court of Appeals for the Sixth Circuit issued a decision invalidating the reclassification and the rules contained in the FCC’s order. It is nonetheless possible that the new Administration, Congress or state legislatures could adopt different requirements applicable to Internet access services. The application of new legal requirements to GCI Holdings’ Internet services could adversely affect their respective businesses.

In 2024, GCI Holdings became subject to new requirements to post standardized labels disclosing their network management policies and performance of GCI Holdings’ broadband Internet access services, similar to the format of food nutrition labels, for each of their currently available consumer Internet offerings. The rules require disclosure of information regarding broadband prices, introductory rates, data allowances, and broadband speeds.

The 2018 FCC order reclassifying Internet access services also ruled that state regulators may not impose obligations similar to federal network neutrality obligations that the FCC eliminated, but this blanket prohibition was vacated by a federal court of appeals in 2019. The court left open the possibility that individual state laws could be deemed preempted on a case-by-case basis if it is shown that they conflict with federal law. Several states have adopted rules similar to the network neutrality requirements that were eliminated by the FCC, and the California rules were upheld in federal court. California has also adopted other regulations, including network resiliency rules to assure backup power is available after natural disasters and other outages, and it is considering the imposition of licensing requirements and service quality metrics on Internet service providers. New York adopted legislation that would require Internet service providers to offer a discounted Internet service to qualifying low-income consumers. A federal district judge enjoined enforcement as likely to be deemed rate regulation of Internet service that would be preempted by federal law, but that injunction was reversed by a federal court of appeals. On December 16, 2024, the Supreme Court denied certiorari for the appeal of that decision, although petitioners have sought rehearing of the denial in light of the Sixth Circuit’s decision setting aside the FCC’s reclassification of Internet access as telecommunications services. The rules became enforceable by the Attorney General of New York on January 15, 2025. GCI Holdings cannot predict the outcome of that appeal, what other legislation and regulations may be adopted by states or how challenges to such requirements will be resolved.

In October 2024, the Federal Trade Commission (“FTC”) adopted rules that would make it easier and faster for consumers to terminate subscription services, including all GCI Holdings’ services. These rules have been challenged in federal court, and GCI Holdings cannot predict the outcome of those challenges. The rules could be modified or rescinded by the FTC in the new Administration. The application of these rules could adversely affect GCI Holdings’ business.

In November 2023, the FCC adopted new rules governing digital discrimination, pursuant to the Infrastructure Investment and Jobs Act of 2021 (the “IIJA”), to prevent discrimination of access to broadband Internet services. Most of these rules have become effective, but they are subject to ongoing legal challenges and could be modified or rescinded by the FCC in the new Administration. California adopted digital discrimination rules in November 2024. GCI Holdings cannot predict the outcome of legal challenges or whether the nature of practices that could be subject to enforcement under these rules could adversely affect its business.

The FCC has adopted rules for service providers to report broadband availability, pursuant to the Broadband Data Act. Providers are required to report their service areas twice each year. The service areas reported are subject to challenge and FCC verification requests. A broadband provider that provides inaccurate maps or fails to respond properly to challenges may be subject to enforcement action by the FCC. The FCC can also fine a provider for filing incorrect maps.

Other Federal Activities.   Congress and certain federal agencies are considering ways to streamline federal permitting obligations and are in the process of providing significant additional financial support for broadband services in areas that are difficult to serve. These activities are continually monitored and it cannot be predicted at this time whether those efforts will make a material difference to the ability to deploy broadband infrastructure.

 

73

 

Universal Service and Other Infrastructure Subsidies

In recent years, federal, state and local governments have offered billions of dollars in subsidies to companies deploying broadband to areas deemed to be “unserved” or “underserved,” using funds from the FCC’s RDOF auction in 2020, the Coronavirus Aid, Relief and Economic Security Act (2020), the American Rescue Plan Act of 2021 (“ARPA”), and the IIJA. GCI Holdings supports such subsidies, provided they are not directed to areas that are already served, and have sought and expect to continue to seek subsidies for their own broadband construction in unserved and underserved areas through programs including, if regulatory requirements are reasonable, the IIJA.

Legal Challenges to the Constitutionality of the FCC Universal Service Support Programs.   There have been a number of legal challenges to the constitutionality of the USF. The U.S. Courts of Appeals for the Sixth and Eleventh Circuits rejected such challenges in 2023, as did a panel of three judges in the Fifth Circuit. However, on July 24, 2024, the U.S. Court of Appeals for the Fifth Circuit sitting en banc ruled that the USF program is unconstitutional as currently administered, and remanded the case to the FCC. In its decision, the en banc Fifth Circuit concluded that there was an impermissible public delegation of legislative authority to the FCC and an impermissible private delegation of authority from the FCC to the Universal Service Administrative Company, the private company responsible for USF administration. The Supreme Court granted petitions for certiorari from the Fifth Circuit’s decision and heard the case on March 26, 2025; the case is likely to be decided by summer 2025. In addition, it is possible that additional cases and appeals will continue to be filed in relation to the matter. There is significant uncertainty regarding the outcome of the Supreme Court review, as well as whether any action taken by the FCC or Congress to resolve the issue would be sufficient and what impact such actions might have on the USF program. A Supreme Court ruling upholding the Fifth Circuit’s decision or, more broadly, determining that the legislation establishing the USF program or its funding method is unconstitutional could disrupt or eliminate GCI Holdings’ USF support unless and until any identified legal defects with the program structure or administration are remedied. Such a ruling would likely result in a material decrease in revenue and accounts receivable, which could likely have an adverse effect on GCI Holdings’ business and the Company’s financial position, results of operations or liquidity.

Pause in Federal Financial Assistance.   On January 27, 2025, the OMB issued a memorandum directing a pause in federal financial assistance pending review for consistency with presidential executive actions. On January 28, 2025, OMB clarified that this only applied to programs affected by certain specified executive actions, which do not appear to include FCC universal service support programs. OMB subsequently withdrew the memorandum, which has also been subject to preliminary injunctions by two federal district courts. However, if this or another pause were to extend to federal universal service support programs, or to other infrastructure grants that GCI receives, and such a pause were to become extended, it could have a material adverse effect on GCI Holdings’ business and the Company’s financial position, results of operations or liquidity.

RHC Program.   The USF RHC Program provides funding to eligible healthcare providers for telecommunications and broadband services. The RHC Telecommunications Program subsidizes the rates for telecommunications services provided to rural health care providers based on the difference between the urban and rural rates for such services. The Healthcare Connect Fund Program provides support for high-capacity broadband connectivity to eligible health care providers.

The rates that GCI and other carriers can charge for service provided under the RHC Telecommunications Program are highly regulated by the FCC. FCC rules provide that a telecommunications carrier can only charge a rural rate that is the average of rates actually being charged to commercial customers, other than health care providers, for identical or similar services in the rural area where the health care provider is located. If that is not available, the rural rate must be the average of tariffed or other publicly available rates charged in that area over the same distance by other carriers. If there is no rate available using rates actually being charged by GCI or other carriers, then, through the end of Funding Year 2025, which ends in June 2026, GCI may use a previously approved rural rate. If none of the preceding options are available, then the rate must be determined by a cost study submitted to the FCC or, for jurisdictionally intrastate services, to the state public utility commission. The RHC Telecommunications Program funds the difference between the rural rate and the urban rate, which is the amount that GCI must collect from the health care provider. The FCC has an ongoing rulemaking proceeding addressing the

 

74

 

RHC rules, how subsidies are determined and related processes. GCI cannot predict which changes the FCC will adopt, and whether those changes will benefit or adversely affect GCI. The ongoing uncertainty in program funding, as well as the uncertainty associated with the rate review, could have an adverse effect on its business, financial position, results of operations or liquidity.

RHC Program Funding Cap.   The RHC Program has a funding cap for each individual funding year that is annually adjusted for inflation, and which the FCC can increase by carrying forward unused funds from prior funding years. In recent years, including the current year, this funding cap has not limited the amount of funding received by participants; however, management continues to monitor the funding cap and its potential impact on funding in future years.

Enforcement Bureau and Related Inquiries.   On March 23, 2018, GCI Holdings received a letter of inquiry and request for information from the Enforcement Bureau of the FCC relating to the period beginning January 1, 2015 and including all future periods. This included inquiry into the rates charged by GCI Holdings and other aspects related to the Enforcement Bureau’s review of GCI Holdings’ compliance with program rules, which are discussed separately below.

In the fourth quarter of 2019, GCI Holdings became aware of potential RHC Program compliance issues related to certain of GCI Holdings’ currently active and expired contracts with certain of its RHC customers. The Company and its external experts performed significant and extensive procedures to determine whether GCI Holdings’ currently active and expired contracts with its RHC customers would be deemed to be in compliance with the RHC Program rules. GCI Holdings notified the FCC of the potential compliance issues in the fourth quarter of 2019.

On May 28, 2020, GCI Holdings received a second letter of inquiry from the Enforcement Bureau in the same matter noted above. This second letter, which was in response to a voluntary disclosure made by GCI Holdings to the FCC, extended the scope of the original inquiry to also include various questions regarding compliance with the records retention requirements related to the (i) original inquiry and (ii) RHC Program.

On December 17, 2020, GCI Holdings received a Subpoena Duces Tecum from the FCC’s Office of the Inspector General requiring production of documents from January 1, 2009 to the present related to a single RHC customer and related contracts, information regarding GCI Holdings’ determination of rural rates for a single customer, and to provide information regarding persons with knowledge of pricing practices generally.

On April 21, 2021, representatives of the Department of Justice (“DOJ”) informed GCI Holdings that a qui tam action had been filed in the Western District of Washington arising from the subject matter under review by the Enforcement Bureau. The DOJ was investigating whether GCI Holdings submitted false claims and/or statements in connection with GCI’s participation in the FCC’s RHC Program. On July 14, 2021, the DOJ issued a Civil Investigative Demand with regard to the qui tam action.

The FCC’s Enforcement Bureau and GCI Holdings held discussions regarding GCI Holdings’ potential RHC Program compliance issues related to certain of its contracts with its RHC customers for which GCI Holdings had previously recognized an estimated liability for a probable loss of approximately $12 million in 2019 for contracts that were deemed probable of not complying with the RHC Program rules. During the year ended December 31, 2022, GCI Holdings recorded an additional estimated settlement expense of $15 million relating to a settlement offer made by GCI Holdings resulting in a total estimated liability of $27 million.

The DOJ and GCI Holdings held discussions regarding the qui tam action whereby the DOJ clarified that its investigation relates to the years from 2010 through 2019 and alleged that GCI Holdings had submitted false claims under the RHC Program during this time period. During the year ended December 31, 2022, GCI Holdings recorded a $14 million estimated settlement expense to reflect discussions and settlement offers that GCI Holdings made to the DOJ.

Separately, during the third quarter of 2022, GCI Holdings became aware of possible RHC Program compliance issues relating to potential conflicts of interest identified in the historical competitive bidding process with respect to certain of its contracts with its RHC customers. GCI Holdings notified the FCC’s

 

75

 

Enforcement Bureau of the potential compliance issues; however, the Company is unable to assess the ultimate outcome of the potential compliance issues and is unable to reasonably estimate any range of loss or possible loss.

On May 10, 2023, GCI Holdings entered into a final settlement agreement with both the FCC and the DOJ to resolve all Enforcement Bureau and Related Inquiries discussed above except for the matter that was separately identified during the third quarter of 2022, which continues to remain outstanding. The settlement with the FCC and the DOJ resulted in a total cash payment of $41 million of which $27 million was paid to the FCC and $14 million was paid to the DOJ in 2023, which had been previously recorded as liabilities.

Schools and Libraries Program.   In 2014, the FCC adopted orders modernizing the USF Schools and Libraries Program (“E-Rate”), which aids schools and libraries in obtaining affordable broadband. These orders, among other things, increased the annual E-Rate cap by approximately $1.5 billion, designated funds for internal connections within schools and libraries, and eliminated funding for certain legacy services, such as voice, to increase the availability of 21st century connectivity to support digital learning in schools nationwide. The FCC has also continued to expand the range of services supported, including dark fiber construction and certain WiFi hotspots, and initiating a pilot for E-Rate support of school and library cybersecurity. These orders did not have a material effect on the overall E-Rate support available to GCI Holdings’ schools and libraries customers, and therefore did not materially affect its revenue from such customers. See “Risk Factors” above for additional risks related to GCI Holdings’ participation in this USF program.

Universal Service for Fixed Voice and Broadband for Rural and High-Cost Areas.   The USF provides support to ETCs related to their provision of facilities-based wireline telephone service in high-cost areas. Under the Alaska High Cost Order issued by the FCC in 2016, GCI Holdings receives this support for its incumbent local exchange carrier operations, which are ETCs under FCC regulations and RCA Orders. This support is frozen at the 2011 levels for High Cost Loop Support and Interstate Common Line Support, with certain adjustments. The support has a ten-year term, from January 1, 2017 to December 31, 2026. Beginning in January 2025, the support amount increases by 30%. Without ETC status, GCI Holdings would not qualify for USF support in these areas, and its net cost of providing local telephone services in these areas would be materially adversely affected. Pursuant to the Alaska High Cost Order, GCI Holdings must meet certain performance requirements with respect to the offering of broadband services in its incumbent local exchange carrier areas. The FCC directed the Bureau to reassess those performance commitments before December 31, 2021, and the Bureau approved revised performance commitments on December 23, 2021. If GCI Holdings fails to meet these performance requirements, it will be subject to repayment of a portion of the high-cost support received, as specified in the Alaska High Cost Order, plus potentially an additional penalty.

In 2024, the FCC adopted the Alaska Connect Fund Order, which is the successor to the 2016 Alaska High Cost Order. The Alaska Connect Fund Order for wireline providers maintains their existing funding and performance requirements through 2028. Support levels and obligations starting in 2029 have not yet been set by the FCC and could impact GCI Holdings’ ability to continue providing local telephone service in the areas where it relies on high-cost support.

Universal Service Support for Mobile.   Under FCC regulations and RCA orders, GCI Holdings is an authorized ETC for purposes of providing wireless telephone service in many rural areas throughout Alaska. Without ETC status, GCI Holdings would not qualify for USF support in these areas or other rural areas where it proposes to offer facilities-based wireless telephone services, and its net cost of providing wireless telephone services in these areas would be materially adversely affected.

Per the Alaska High Cost Order, as of January 1, 2017, Remote (as defined by the Alaska High Cost Order) high-cost support payments to Alaska High Cost participants are frozen on a per-company basis at adjusted December 2014 levels for a ten-year term in exchange for meeting individualized performance obligations to offer voice and broadband services meeting the service obligations at specified minimum speeds by five-year and ten-year service milestones to a specified number of locations. Support amounts increase 30% starting January 2025. Remote high-cost support is no longer dependent upon line counts and line count filings are no longer required. Under the terms of the Alaska High Cost Order, the FCC was to initiate a

 

76

 

process in 2021 to eliminate duplicate support in areas that were served by more than one subsidized mobile wireless carrier as of December 31, 2020. As part of the Alaska High Cost Order, the FCC issued a Notice of Proposed Rulemaking seeking comment on how to implement that process. The process to eliminate duplicate support in areas has been delayed, and may affect the amount of support GCI Holdings receives to provide wireless services starting in 2030.

In November 2024, the FCC adopted the Alaska Connect Fund Order to succeed the Alaska High Cost Order. The Order may result in GCI Holdings receiving less support for its wireless operations in rural Alaska, and could have a material effect on its ability to continue providing service. The FCC has set milestones for some decisions, such as how to assure that only one provider receives support for a single area and how to calculate any amounts that would be removed as associated with intangible areas, or subject to potential competitive selection in areas with more than one supported mobile provider. The outcome of the FCC decisions and related proceedings could materially impact GCI Holdings’ ability to continue providing or upgrading wireless services in rural Alaska.

Wireline Voice Services and Products

General.   The FCC has never classified the VoIP wireline telephone services that GCI Holdings offers as “telecommunications services” that are subject to traditional federal common carrier regulation, but instead has imposed some of these regulatory requirements on a case-by-case basis, such as requirements relating to 911 emergency services (“E911”), Communications Assistance for Law Enforcement Act (“CALEA”) (the statute governing law enforcement access to and surveillance of communications), USF contributions, customer privacy and Customer Proprietary Network Information protections, number portability, network and/or 911 outage reporting, rural call completion, disability access, regulatory fees, back-up power, robocall mitigation and discontinuance of service. Nonetheless, GCI Holdings operates as a common carrier with respect to these services. It is possible that the FCC or Congress will impose additional federal requirements on VoIP telephone services in the future.

GCI Holdings’ carrier operations are subject to certain state and local regulatory fees such as E911 fees and contributions to state universal service funds.

As an interexchange carrier, GCI Holdings is subject to regulation by the FCC and the RCA as a non-dominant provider of interstate, international, and intrastate long-distance services. As a state-certificated competitive local exchange carrier, GCI Holdings is subject to regulation by the FCC and the RCA as a non-dominant provider of local communications services. However, as of November 2019, the Alaska Legislature eliminated the RCA’s regulation of rates but retained its certificate authority for intrastate long-distance and local communications services. Military franchise requirements also affect GCI Holdings’ ability to provide communications services to military bases.

Rural Exemption and Interconnection.   A Rural Telephone Company is exempt from compliance with certain material interconnection requirements under Section 251(c) of the Communications Act, including the obligation to negotiate Section 251(b) and (c) interconnection requirements in good faith, unless and until a state regulatory commission lifts such “rural exemption” or otherwise finds it does not apply. All ILECs in Alaska are Rural Telephone Companies except Alaska Communications Systems Group, Inc. in its Anchorage study area. GCI Holdings participated in numerous proceedings regarding the rural exemptions of various ILECs in order to achieve the necessary interconnection agreements with the remaining ILECs. In other cases, the interconnection agreements were reached by negotiation without regard to the implications of the ILEC’s rural exemption.

GCI Holdings has negotiated and will continue to negotiate interconnection agreements as necessary. GCI Holdings has entered all of the major Alaskan markets with local access services.

See “— Competition — Voice Services and Products” for more information.

Access Charges and Other Regulated Fees.   The FCC regulates the fees that local telephone companies charge long-distance companies for access to their local networks. In 2011, the FCC released rules to restructure and reduce over time terminating interstate access charges, along with a proposal to adopt similar reforms applicable to originating interstate access charges. The details of implementation in general and between different classes of technology continue to be addressed by the FCC and could affect the economics

 

77

 

of some aspects of GCI Holdings’ business. GCI Holdings cannot predict at this time the impact of this implementation or future implementation of adopted reforms, but GCI Holdings does not expect it to have a material adverse impact on its operations.

Local facilities and services obtained from other providers.   Although GCI Holdings primarily provides communications services over its own facilities, the ability to obtain access to other providers’ networks is an important element of its local access services business. Changes in applicable regulations and the wholesale offerings of suppliers could affect GCI Holdings’ ability to provide service.

Spectrum

The FCC regulates spectrum usage in ways that could impact GCI Holdings’ operations, including for microwave backhaul, unlicensed WiFi and CBRS. GCI Holdings also operates its own extensive mobile wireless service networks in Alaska. These businesses’ ability to access and use spectrum that may become available in the future is uncertain and may be limited by further FCC auction or allocation decisions. While the FCC currently does not have auction authority, Congressional action to restore the FCC’s auction authority could direct spectrum be licensed in a manner beneficial to competitors. New or additional spectrum obtained by other parties could lead to additional wireless competition to these businesses’ existing and future services.

Wireless Services and Products

General.   The FCC regulates the licensing, leasing, construction, interconnection, operation, acquisition, and transfer of wireless network systems in the United States pursuant to the Communications Act. GCI Holdings’ wireless licensee subsidiaries are subject to regulation by the FCC and must comply with certain build-out and other license conditions, as well as with the FCC’s specific regulations governing wireless services. The FCC imposes significant regulation on licensees of wireless spectrum with respect to how radio spectrum is used by licensees, the nature of services licensees may offer and how such services may be offered, and the resolution of issues of interference between spectrum bands. The FCC does not currently regulate rates for services offered by commercial mobile radio service providers (the official legal description for wireless service providers).

Commercial mobile radio service wireless systems are subject to Federal Aviation Administration and FCC regulations governing the location, lighting, construction, modification, and registration of antenna structures on which GCI Holdings’ antennas and associated equipment are located and are also subject to regulation under federal environmental laws and the FCC’s environmental regulations, including limits on radio frequency radiation from wireless handsets and antennas.

Emergency 911 and 988.   The FCC has imposed rules requiring all mobile carriers, including MVNOs, to provide emergency 911 services, including E911 services that provide the caller’s phone number and approximate location to local public safety dispatch agencies. Providers are required to transmit the geographic coordinates of the customer’s location, for both indoor and outdoor locations, within accuracy parameters revised by the FCC, to be implemented over a phase-in period. The FCC also imposed requirements to allow users to text to 911 if the local public safety dispatch agency requests and is able to receive such texts. Providers may not demand cost recovery as a condition of providing E911, although they are permitted to negotiate cost recovery if it is not mandated by the state or local governments. On June 1, 2020 and subsequently on May 24, 2021, GCI Holdings timely sought waivers from the FCC concerning the percentage of wireless calls required to meet 911 location accuracy benchmarks pursuant to the FCC’s phase-in period. In December 2021, GCI Holdings met the 2020 benchmark. GCI Holdings has been able to meet FCC requirements for text to 911 obligations to date. In 2024, the FCC adopted rules requiring carriers to use the geographic coordinates of the customer’s location to route 911 calls to the appropriate emergency call centers; GCI Holdings must implement this location-based routing by May 13, 2026. Also in 2024, the FCC adopted rules intended to facilitate the transition to next-generation 911 services. Carriers are required to interconnect with public safety agencies and call centers in IP-based format upon request from those agencies and provided the agencies meet certain technical requirements.

Additionally, on an ongoing basis, GCI Holdings is subject to FCC-imposed rules requiring timely reporting of outages impacting access to emergency 911 services. Failure to comply with reporting requirements could result in the imposition of fines and other administrative remedies.

 

78

 

The FCC has also imposed rules adopting the three-digit short code 988 for calls and texts placed to the 988 Suicide and Crisis Lifeline. All calls and texts to 988 are transmitted to the national Suicide and Crisis Lifeline call center; by December 14, 2026, GCI Holdings will also be required to include georouting location information with these calls.

State and Local Regulation.   While the Communications Act generally preempts state and local governments from regulating the entry of, and the rates charged by, wireless carriers, it also permits a state to petition the FCC to allow it to impose commercial mobile radio service rate regulation when market conditions fail to adequately protect customers and such service is a replacement for a substantial portion of the telephone wireline exchange service within a state. The State of Alaska currently has no such petition on file.

In addition, the Communications Act does not expressly preempt the states from regulating the “terms and conditions” of wireless service. Several states have invoked this “terms and conditions” authority to impose or propose various consumer protection regulations on the wireless industry. State attorneys general have also become more active in enforcing state consumer protection laws against sales practices and services of wireless carriers. States also may impose their own universal service support requirements on wireless and other communications carriers, similar to the contribution requirements that have been established by the FCC.

States have become more active in attempting to impose new taxes and fees on wireless carriers, such as gross receipts taxes. Where successful, these taxes and fees are generally passed through to customers and result in higher costs to customers.

At the local level, wireless facilities typically are subject to zoning and land use regulation. Neither local nor state governments may categorically prohibit the construction of wireless facilities in any community or take actions, such as indefinite moratoria, which have the effect of prohibiting construction. Pursuant to Section 6409(a) of the Middle Class Tax Relief Act of 2012, state and local governments are further constrained in their regulation of changes to existing wireless infrastructure. Nonetheless, securing federal, state and local government approvals for new antenna structures has been and is likely to continue to be difficult, lengthy, and costly.

Privacy and Information Security Regulation

The Communications Act limits GCI Holdings’ ability to collect, use, and disclose customers’ personally identifiable information for its Internet, video, mobile and voice services. GCI Holdings is subject to additional federal, state, and local laws and regulations that impose additional restrictions on the collection, use and disclosure of consumer information. All broadband and VoIP providers are also obliged by CALEA to configure their networks in a manner that facilitates the ability of state and federal law enforcement, with proper legal process authorized under the Electronic Communications Privacy Act, to wiretap and obtain records and information concerning their customers, including the content of their communications. Further, the FCC, the FTC, and many states regulate and restrict the marketing practices of communications service providers, including telemarketing and sending unsolicited commercial emails. The FTC currently has the authority, pursuant to its general authority to enforce against unfair or deceptive acts and practices, to protect the privacy of customers of non-common carrier services (e.g., Internet service customers) including GCI Holdings’ use and disclosure of certain customer information.

GCI Holdings’ operations are also subject to federal and state laws governing information security. All states have data breach notification laws that would require us to inform individuals and regulators in the event of a breach that could impact personal information of customers. In the event of an information security breach, such rules may require consumer and government agency notification and may result in regulatory enforcement actions with the potential of monetary forfeitures. The FCC, the FTC and state attorneys general regularly bring enforcement actions against companies related to information security breaches and privacy violations.

Various security standards provide guidance to telecommunications companies in order to help identify and mitigate cybersecurity risks. One such standard is the voluntary Cybersecurity Framework (“CSF”) released by the National Institute for Standards and Technology (“NIST”) in 2014 and updated in

 

79

 

2018 and 2024, in cooperation with other federal agencies and owners and operators of U.S. critical infrastructure. The NIST CSF provides a prioritized and flexible model for organizations to identify and manage cyber risks inherent to their business. It was designed to supplement, not supersede, existing cybersecurity regulations and requirements. Several government agencies have encouraged compliance with the NIST CSF, including the FCC and Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (“CISA”). GCI Holdings’ overall cybersecurity program is informed by the NIST and other industry standards and best practices. The FCC adopted rules expanding its cybersecurity guidelines and requirements. These rules have been challenged in federal court and GCI Holdings cannot predict the outcome of that appeal or whether the rules could be modified by the new Administration. CISA has sought comment on the development of cyber incident reporting rules, pursuant to 2022 legislative requirements, that require critical infrastructure entities to report substantial cyber incidents within 72 hours of their discovery.

The FTC has an ongoing Advance Notice of Proposed Rulemaking to explore rules related to the collection, analysis, and monetization of consumers’ information, as well as companies’ data security practices and related disclosures to consumers. The FTC has also warned companies not to misuse consumers’ biometric information, with a broad definition of biometrics similar to Washington’s My Health My Data Act and the CCPA that treat biometrics as sensitive consumer information, and Illinois and Texas have also adopted laws regulating the use of such information. The new Congress may also adopt new privacy and data security obligations that could supplement or preempt state privacy laws. GCI Holdings cannot predict whether any of the above efforts will be successful, challenged, upheld, vacated, or preempted, or how new legislation and regulations, if any, would affect its business.

Environmental Regulations

GCI Holdings undertakes activities that may, under certain circumstances, affect the environment. Accordingly, it may be subject to federal, state, and local laws designed to preserve or protect the environment, including the Clean Water Act and the Emergency Planning and Community Right-to-Know Act. The FCC, Bureau of Land Management, U.S. Forest Service, U.S. Fish and Wildlife Service, U.S. Army Corps of Engineers, Bureau of Indian Affairs, and National Park Service are among the federal agencies required by the National Environmental Policy Act of 1969 and National Historic Preservation Act to consider the environmental impact of actions they authorize, including facility construction.

The principal effect of GCI Holdings’ facilities on the environment would be in the form of construction and operation of facilities and networks at various locations in Alaska and between Alaska, Washington, and Oregon. GCI Holdings’ facilities have been constructed in accordance with federal, state and local building codes and zoning regulations whenever and wherever applicable. GCI Holdings obtains federal, state, and local permits, as required, for its projects and operations. GCI Holdings is unaware of any material violations of federal, state, or local regulations or permits.

Competition

GCI Holdings operates in an intensely competitive industry and competes with a number of companies that provide a broad range of communication, entertainment, and information products and services. Technological changes are further intensifying and complicating the competitive landscape and consumer behavior.

Residential/Consumer Services

GCI Holdings faces intense competition for residential customers, both from existing competitors and, as a result of the rapid development of new technologies, services and products, from new entrants.

Internet Competition

The Internet industry is highly competitive, rapidly evolving and subject to constant technological change. Competition is based upon price, service bundles, the services and enhancements offered, the technologies used, customer service, billing services, and perceived quality, reliability and availability.

 

80

 

GCI Holdings’ residential Internet services face competition across their footprints from fiber-to-the-home, fixed wireless broadband, Internet delivered via low earth orbit (“LEO”) or geostationary satellite and digital subscriber line (“DSL”) services. In several markets, GCI Holdings also faces competition from one or more fixed wireless providers that deliver point-to-point Internet connectivity. Internet services based on LEO technology have been gaining market share. DSL service is offered across a portion of GCI Holdings’ footprint, often at prices lower than GCI Holdings’ Internet services, although typically at speeds much lower than the minimum speeds offered by GCI Holdings. In addition, commercial areas, such as retail malls, restaurants and airports, offer WiFi Internet service. Numerous local governments are also considering or actively pursuing publicly subsidized WiFi Internet access networks. In addition, providers are constructing open access networks that can deliver services from multiple underlying Internet service providers. These options offer alternatives to cable-based Internet access.

Video Competition

GCI Holdings’ residential video services faces growing competition across their footprints from a number of other sources, including companies that deliver linear network programming, movies and television shows on demand and other video content over broadband Internet connections to televisions, computers, tablets and mobile devices. Increasingly, exclusive television content, including marquee content like live sporting events, is becoming available from sources other than traditional MVPDs. These competitors include virtual MVPDs such as YouTube TV, Hulu Live, Sling TV, Philo and DirecTV Stream. Other online video business models and products have also developed, some offered by programmers including, (i) subscription video on demand services such as Netflix, Apple TV+, Amazon Prime and Hulu Plus, (ii) programmer streaming applications such as Max, Disney+, Peacock and Paramount+, (iii) ad-supported free online video products, including YouTube and Pluto TV, (iv) pay-per-view products, such as iTunes, and (v) additional offerings from mobile providers which continue to integrate and bundle video services and mobile products.

GCI Holdings’ residential video services also face competition from direct broadcast satellite (“DBS”) service providers. DBS providers offer satellite-delivered pre-packaged programming services that can be received by relatively small and inexpensive receiving dishes. DBS providers offer aggressive promotional pricing and video services that are comparable in many respects to GCI Holdings’ residential video service.

GCI Holdings has announced that it plans to exit the video business in 2025, subject to regulatory approvals.

Mobile Competition

GCI Holdings’ mobile services face competition from national mobile network operators including AT&T, Inc. (“AT&T”) and Verizon as well as a variety of regional operators and mobile virtual network operators. Most carriers offer unlimited data packages to customers while some also offer free or highly discounted devices. Various operators also offer wireless Internet services delivered over networks which they continue to enhance to deliver faster speeds. As a regional wireless carrier, GCI Holdings may not have immediate access to some wireless handsets that are available to these national wireless carriers.

AT&T and Verizon continue to expand 5G mobile services, and consolidations in the telecom industry continue to increase competition as they seek to offer converged connectivity services similar to GCI Holdings.

Voice Competition

GCI Holdings’ residential voice services compete with wireless and wireline phone providers across their footprints, as well as other forms of communication, such as text messaging on cellular phones, instant messaging, social networking services, video conferencing and email. GCI Holdings also competes with “over-the-top” phone providers, as well as companies that sell phone cards at a cost per minute for both national and international service. The increase in the number of different technologies capable of carrying voice services and the number of alternative communication options available to customers as well as the replacement of wireline services by wireless have intensified the competitive environment in which GCI Holdings operates its residential voice services.

 

81

 

GCI Holdings also competes against ILECs, long-distance resellers and certain smaller rural local telephone companies for local access and long-distance. GCI Holdings has competed by offering what it believes is excellent customer service and by providing desirable bundles of services.

Additional Competition

In some of GCI Holdings’ operating areas, other regional competitors have built networks that offer a combination of Internet, video, mobile and voice services that compete with its services.

GCI Holdings also competes with other sources of news, information and entertainment, including over-the-air television broadcast reception, live events, movie theaters and the Internet. Competition is also posed by fixed wireless and satellite master antenna television systems serving MDUs, such as condominiums, apartment complexes, and private residential communities.

Business Services

GCI Holdings faces intense competition across each of its business service product offerings. GCI Holdings’ business data, wireless and voice services face similar competition as described above for its consumer products.

Advertising

GCI Holdings faces intense competition for advertising revenue across many different platforms and from a wide range of local and national competitors. Advertising competition has increased and will likely continue to increase as new advertising platforms seek to attract the same advertisers. GCI Holdings competes for advertising revenue against, among others, local broadcast stations, national cable and broadcast networks, radio stations, print media, connected device platforms, direct-to-consumer ad-supported applications and online advertising companies and content providers.

Human Capital Resources

Employees

As described above, upon the completion of the spinoff transactions, GCI Liberty will become party to a services agreement with Liberty Media, pursuant to which 84 Liberty Media corporate employees (as of December 31, 2024) will provide certain management services to GCI Liberty for a determined fee. As a result, GCI Liberty is not responsible for the hiring, retention and compensation of these individuals. However, GCI Liberty directly benefits from the efforts undertaken by Liberty Media to attract and retain talented employees. Liberty Media strives to create a workplace with opportunities for its employees to grow and develop in their careers, supported by competitive compensation, benefits and health and wellness programs, and by programs that build connections between its employees and their communities. GCI Liberty fully supports these efforts.

Upon the completion of the spinoff transactions, GCI Liberty and its consolidated subsidiaries expect to have an aggregate of approximately 1,900 full and part-time employees and GCI Liberty is not party to any union contracts with its employees. GCI Liberty believes that its employee relations are good.

GCI Holdings

GCI Holdings has been operating in Alaska for more than 40 years and most of its employees live in the communities it serves. While most employees live in Alaska, GCI Holdings has employees located throughout the United States, and approximately 70% of GCI Holdings’ employees work from home. Many of GCI Holdings’ employees have been with the company for decades and, in some cases, their children have joined the GCI Holdings team and have become the next generation of the GCI family. This sense of family and valuing its employees is a strong part of GCI Holdings’ culture and is one that generates pride among employees and company leadership. GCI Holdings is committed to creating and maintaining an environment that provides opportunities for excellence and advancements. To that end, GCI Holdings is committed to ensuring its employees, at all levels of the company, are experts in their fields, and provides

 

82

 

opportunities for training, including certifications relating to various technical aspects of the GCI Holdings business, training in people skills, management best practices and team-building, as well as tuition reimbursement to employees who are pursuing college or technical schools degrees while working for GCI Holdings.

 

83

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion and analysis provides information regarding the historical combined results of operations and financial condition of GCI Liberty, Inc. (“GCI Liberty”, the “Company,” “us,” “we,” or “our”) This discussion should be read in conjunction with our accompanying combined financial statements and the notes thereto.

Overview

GCI Liberty is currently a wholly owned subsidiary of Liberty Broadband Corporation (“Liberty Broadband”). GCI Liberty’s businesses, assets and liabilities will initially consist of 100% of the outstanding equity interests in GCI, LLC, GCI Holdings, LLC (“GCI Holdings” or “GCI”) and their subsidiaries. Immediately following the separation (defined below), GCI Liberty will be an independent publicly traded company, and Liberty Broadband will not retain any ownership interest in GCI Liberty.

GCI Liberty was formed in Nevada in December 2024 for the purpose of ultimately holding the GCI Business. Liberty Broadband and its subsidiaries will complete the internal reorganization in order for Liberty Broadband to transfer the GCI Business to GCI Liberty in exchange for GCI Liberty stock, including shares of GCI Liberty non-voting preferred stock, and the assumption of liabilities related to the GCI Business. The internal reorganization will result in GCI Liberty owning, directly or indirectly, GCI, LLC and the operations comprising, and the entities that conduct, the GCI Business. Following the internal reorganization, GCI Liberty will effect a reclassification of GCI Liberty’s existing common stock into a sufficient number of shares of Series A GCI Group common stock, Series B GCI Group common stock and Series C GCI Group common stock to complete the divestiture of GCI Liberty pursuant to the distribution (the “distribution”) by Liberty Broadband to the holders of record of Liberty Broadband common stock, as of the record date for the distribution, of all the shares of GCI Group common stock held by Liberty Broadband immediately prior to the distribution. The internal reorganization, the reclassification and the distribution are collectively referred as the “separation.”

In connection with the separation, we expect to enter into certain agreements, including the separation and distribution agreement, the tax sharing agreement and the tax receivables agreement, with Liberty Broadband, pursuant to which, among other things, we and Liberty Broadband will indemnify each other against certain losses that may arise from, among other things, our respective businesses, assets and liabilities.

Update on Economic Conditions

GCI Holdings offers wireless and wireline telecommunication services, data services, video services, and managed services to customers primarily throughout Alaska. Because of this geographic concentration, growth of GCI Holdings’ business and operations depends upon economic conditions in Alaska. In recent years, varying factors have contributed to significant volatility and disruption of financial markets and global supply chains. Additionally, the U.S. Federal Reserve increased interest rates starting in March 2022 and throughout 2023, though they had started decreasing rates in 2024. Mounting inflationary cost pressures and recessionary fears have negatively impacted the U.S. and global economy. Unfavorable economic conditions, such as a recession or economic slowdown in the U.S., or inflation in the markets in which GCI operates, could negatively affect the affordability of and demand for GCI’s products and services and its cost of doing business. Increased costs to equipment, for example due to increased tariffs, could also impact GCI’s results.

The Alaska economy is dependent upon the oil industry, state and federal spending, investment earnings and tourism. A decline in oil prices would put significant pressure on the Alaska state government budget. The Alaska state government has financial reserves that GCI Holdings believes may be able to help fund the state government for the next couple of years. The Alaska economy is subject to recessionary pressures as a result of the economic impacts of volatility in oil prices, inflation, and other causes that could result in a decrease in economic activity. While it is difficult for GCI Holdings to predict the future impact of a recession on its business, these conditions have had an adverse impact on its business and could adversely affect the affordability of and demand for some of its products and services and cause customers to shift to lower priced products and services or to delay or forgo purchases of its products and services. GCI

 

84

 

Holdings’ customers may not be able to obtain adequate access to credit, which could affect their ability to make timely payments to GCI Holdings and could lead to an increase in accounts receivable and bad debt expense. If Alaska experiences a recession or economic slowdown, it could negatively affect GCI Holdings’ business including its financial position, results of operations, or liquidity, as well as its ability to service debt, pay other obligations and enhance shareholder returns.

In addition, during 2023 and continuing in 2024, GCI Holdings began to experience the impact of inflation-sensitive items, including upward pressure on the costs of materials, labor, and other items that are critical to GCI Holdings’ business. GCI Holdings continues to monitor these impacts closely and, if costs continue to rise, GCI Holdings may be unable to recoup losses or offset diminished margins by passing these costs through to its customers or implementing offsetting cost reductions.

Federal Universal Service Programs

Legal Challenges to the Constitutionality of the Federal Communications Commission (“FCC”) Universal Service Support Programs.   There have been a number of legal challenges to the constitutionality of the Universal Service Fund (“USF”). The U.S. Courts of Appeals for the Sixth and Eleventh Circuits rejected such challenges in 2023, as did a panel of three judges in the Fifth Circuit. However, on July 24, 2024, the U.S. Court of Appeals for the Fifth Circuit sitting en banc ruled that the USF program is unconstitutional as currently administered, and remanded the case to the FCC. In its decision, the en banc Fifth Circuit concluded that there was an impermissible public delegation of legislative authority to the FCC and an impermissible private delegation of authority from the FCC to the Universal Service Administrative Company, the private company responsible for USF administration. The Supreme Court granted petitions for certiorari from the Fifth Circuit’s decision and heard argument on March 26, 2025; the case is likely to be decided by summer 2025. In addition, it is likely that additional cases and appeals will continue to be filed in relation to the matter. There is significant uncertainty regarding the outcome of the Supreme Court review, as well as whether any action taken by the FCC or Congress to resolve the issue would be sufficient and what impact such actions might have on the USF program. A Supreme Court ruling upholding the Fifth Circuit’s decision or, more broadly, determining that the legislation establishing the USF program or its funding method is unconstitutional could disrupt or eliminate GCI Holdings’ USF support unless and until any identified legal defects with the program structure or administration are remedied. Such a ruling would likely result in a material decrease in revenue and accounts receivable, which could likely have an adverse effect on GCI Holdings’ business and the Company’s financial position, results of operations or liquidity.

Pause in Federal Financial Assistance.   On January 27, 2025, the Office of Management and Budget (“OMB”) issued a memorandum directing a pause in federal financial assistance pending review for consistency with presidential executive actions. On January 28, 2025, OMB clarified that this only applied to programs affected by certain specified executive actions, which do not appear to include FCC universal service support programs. OMB subsequently withdrew the memorandum, which has also been subject to preliminary injunctions by two federal district courts. However, if this or another pause were to extend to federal universal service support programs, or to other infrastructure grants that GCI receives, and such a pause were to become extended, it could have a material adverse effect on GCI Holdings’ business and the Company’s financial position, results of operations or liquidity.

Rural Health Care (“RHC”) Program

GCI Holdings receives support from various USF programs including the RHC Program. The USF programs are subject to change by regulatory actions taken by the FCC, interpretations of or compliance with USF program rules, or legislative actions. The USF programs have also been subject to legal challenge, which could disrupt or eliminate the support GCI Holdings receives. Changes to any of the USF programs that GCI Holdings participates in could result in a material decrease in revenue and accounts receivable, which could have an adverse effect on GCI Holdings’ business and the Company’s financial position, results of operations or liquidity. The following paragraphs describe certain separate matters related to the RHC Program that impact or could impact the revenue earned and receivables recognized by the Company. As of December 31, 2024, the Company had net accounts receivable from the RHC Program in the amount of approximately $69 million, which is included within Trade and other receivables in the combined balance sheets.

 

85

 

The rates that GCI and other carriers can charge for service provided under the RHC Telecommunications Program are highly regulated by the FCC. FCC rules provide that a telecommunications carrier can only charge a rural rate that is the average of rates actually being charged to commercial customers, other than health care providers, for identical or similar services in the rural area where the health care provider is located. If that is not available, the rural rate must be the average of tariffed or other publicly available rates charged in that area over the same distance by other carriers. If there is no rate available using rates actually being charged by GCI or other carriers, then, through the end of Funding Year 2025, which ends in June 2026, GCI may use a previously approved rural rate. If none of the preceding options are available, then the rate must be determined by a cost study submitted to the FCC or, for jurisdictionally intrastate services, to the state public utility commission. The RHC Telecommunications Program funds the difference between the rural rate and the urban rate, which is the amount that GCI must collect from the health care provider. The FCC has an ongoing rulemaking proceeding addressing the RHC rules, how subsidies are determined and related processes. GCI cannot predict which changes the FCC will adopt, and whether those changes will benefit or adversely affect GCI.

RHC Program Funding Cap.   The RHC Program has a funding cap for each individual funding year that is annually adjusted for inflation, and which the FCC can increase by carrying forward unused funds from prior funding years. In recent years, including the current year, this funding cap has not limited the amount of funding received by participants; however, management continues to monitor the funding cap and its potential impact on funding in future years.

Enforcement Bureau and Related Inquiries.   On March 23, 2018, GCI Holdings received a letter of inquiry and request for information from the Enforcement Bureau of the FCC relating to the period beginning January 1, 2015 and including all future periods. This included inquiry into the rates charged by GCI Holdings and other aspects related to the Enforcement Bureau’s review of GCI Holdings’ compliance with program rules, which are discussed separately below. The ongoing uncertainty in program funding, as well as the uncertainty associated with the rate review, could have an adverse effect on its business, financial position, results of operations or liquidity.

In the fourth quarter of 2019, GCI Holdings became aware of potential RHC Program compliance issues related to certain of GCI Holdings’ currently active and expired contracts with certain of its RHC customers. The Company and its external experts performed significant and extensive procedures to determine whether GCI Holdings’ currently active and expired contracts with its RHC customers would be deemed to be in compliance with the RHC Program rules. GCI Holdings notified the FCC of the potential compliance issues in the fourth quarter of 2019.

On May 28, 2020, GCI Holdings received a second letter of inquiry from the Enforcement Bureau in the same matter noted above. This second letter, which was in response to a voluntary disclosure made by GCI Holdings to the FCC, extended the scope of the original inquiry to also include various questions regarding compliance with the records retention requirements related to the (i) original inquiry and (ii) RHC Program.

On December 17, 2020, GCI Holdings received a Subpoena Duces Tecum from the FCC’s Office of the Inspector General requiring production of documents from January 1, 2009 to the present related to a single RHC customer and related contracts, information regarding GCI Holdings’ determination of rural rates for a single customer, and to provide information regarding persons with knowledge of pricing practices generally.

On April 21, 2021, representatives of the Department of Justice (“DOJ”) informed GCI Holdings that a qui tam action had been filed in the Western District of Washington arising from the subject matter under review by the Enforcement Bureau. The DOJ was investigating whether GCI Holdings submitted false claims and/or statements in connection with GCI’s participation in the FCC’s RHC Program. On July 14, 2021, the DOJ issued a Civil Investigative Demand with regard to the qui tam action.

The FCC’s Enforcement Bureau and GCI Holdings held discussions regarding GCI Holdings potential RHC Program compliance issues related to certain of its contracts with its RHC customers for which GCI Holdings had previously recognized an estimated liability for a probable loss of approximately $12 million in 2019 for contracts that were deemed probable of not complying with the RHC Program rules. During the

 

86

 

year ended December 31, 2022, GCI Holdings recorded an additional estimated settlement expense of $15 million relating to a settlement offer made by GCI Holdings resulting in a total estimated liability of $27 million.

The DOJ and GCI Holdings held discussions regarding the qui tam action whereby the DOJ clarified that its investigation relates to the years from 2010 through 2019 and alleged that GCI Holdings had submitted false claims under the RHC Program during this time period. During the year ended December 31, 2022, GCI Holdings recorded a $14 million estimated settlement expense to reflect discussions and settlement offers that GCI Holdings made to the DOJ.

Separately, during the third quarter of 2022, GCI Holdings became aware of possible RHC Program compliance issues relating to potential conflicts of interest identified in the historical competitive bidding process with respect to certain of its contracts with its RHC customers. GCI Holdings notified the FCC’s Enforcement Bureau of the potential compliance issues; however, the Company is unable to assess the ultimate outcome of the potential compliance issues and is unable to reasonably estimate any range of loss or possible loss.

On May 10, 2023, GCI entered into a final settlement agreement with both the FCC and the DOJ to resolve all Enforcement Bureau and Related Inquiries discussed above except for the matter that was separately identified during the third quarter of 2022, which continues to remain outstanding. The settlement with the FCC and the DOJ resulted in a total cash payment of $41 million of which $27 million was paid to the FCC and $14 million was paid to the DOJ in 2023, which had been previously recorded as liabilities.

Universal Service for Fixed Voice and Broadband for Rural and High-Cost Areas.   The USF provides support to ETCs related to their provision of facilities-based wireline telephone service in high-cost areas. Under the Alaska High Cost Order issued by the FCC in 2016, GCI Holdings receives this support for its incumbent local exchange carrier operations, which are ETCs under FCC regulations and RCA Orders. This support is frozen at the 2011 levels for High Cost Loop Support and Interstate Common Line Support, with certain adjustments. The support has a ten-year term, from January 1, 2017 to December 31, 2026. Beginning in January 2025, the support amount increases by 30%. Without ETC status, GCI Holdings would not qualify for USF support in these areas, and its net cost of providing local telephone services in these areas would be materially adversely affected. Pursuant to the Alaska High Cost Order, GCI Holdings must meet certain performance requirements with respect to the offering of broadband services in its incumbent local exchange carrier areas. The FCC directed the Bureau to reassess those performance commitments before December 31, 2021, and the Bureau approved revised performance commitments on December 23, 2021. If GCI Holdings fails to meet these performance requirements, it will be subject to repayment of a portion of the high-cost support received, as specified in the Alaska High Cost Order, plus potentially an additional penalty.

In 2024, the FCC adopted the Alaska Connect Fund Order, which is the successor to the 2016 Alaska High Cost Order. The Alaska Connect Fund Order for wireline providers maintains their existing funding and performance requirements through 2028. Support levels and obligations starting in 2029 have not yet been set by the FCC and could impact GCI Holdings’ ability to continue providing local telephone service in the areas where it relies on high-cost support.

Universal Service Support for Mobile.   Under FCC regulations and RCA orders, GCI Holdings is an authorized Eligible Telecommunications Carrier (“ETC”) for purposes of providing wireless telephone service in many rural areas throughout Alaska. Without ETC status, GCI Holdings would not qualify for USF support in these areas or other rural areas where it proposes to offer facilities-based wireless telephone services, and its net cost of providing wireless telephone services in these areas would be materially adversely affected.

Per the Alaska High Cost Order, as of January 1, 2017, Remote (as defined by the Alaska High Cost Order) high cost support payments to Alaska High Cost participants are frozen on a per-company basis at adjusted December 2014 levels for a ten-year term in exchange for meeting individualized performance obligations to offer voice and broadband services meeting the service obligations at specified minimum speeds by five-year and ten-year service milestones to a specified number of locations. Support amounts increase 30% starting January 2025. Remote high cost support is no longer dependent upon line counts and line count

 

87

 

filings are no longer required. Under the terms of the Alaska High Cost Order, the FCC was to initiate a process in 2021 to eliminate duplicate support in areas that were served by more than one subsidized mobile wireless carrier as of December 31, 2020. As part of the Alaska High Cost Order, the FCC issued a Notice of Proposed Rulemaking seeking comment on how to implement that process. The process to eliminate duplicate support in areas has been delayed, and may affect the amount of support GCI Holdings receives to provide wireless services starting in 2030.

In November 2024, the FCC adopted the Alaska Connect Fund Order to succeed the Alaska High Cost Order. The Alaska Connect Fund Order may result in GCI Holdings receiving less support for its wireless operations in rural Alaska, and could have a material effect on its ability to continue providing service. The FCC has set milestones for some decisions, such as how to assure that only one provider receives support for a single area and how to calculate any amounts that would be removed as associated with intangible areas, or subject to potential competitive selection in areas with more than one supported mobile provider. The outcome of the FCC decisions and related proceedings could materially impact GCI Holdings’ ability to continue providing or upgrading wireless services in rural Alaska.

Results of Operations — Combined

General.   Provided in the tables below is information regarding the historical Combined Operating Results and Other Income and Expense of GCI Liberty.

Revenue.   Combined revenue increased $35 million for the year ended December 31, 2024, as compared to the corresponding prior year period. The following table highlights selected key performance indicators used in evaluating GCI Holdings.

(1)

A cable modem subscriber is defined by the purchase of cable modem service regardless of the level of

​

 

88

 

service purchased. If one entity purchases multiple cable modem service access points, each access point is counted as a subscriber.

(2)

A wireless line in service is defined as a wireless device with a monthly fee for services.

​

The components of revenue are as follows:

Consumer data revenue increased $2 million for the year ended December 31, 2024, as compared to the same period in 2023. The increase was primarily driven by subscribers’ selection of plans with higher recurring monthly charges.

Consumer wireless revenue decreased $2 million for the year ended December 31, 2024, as compared to the same period in 2023. The decrease was driven by a decrease in the number of handset sales and a decrease in prepaid data plans.

Consumer other revenue decreased $2 million for the year ended December 31, 2024, as compared to the same period in 2023. Consumer other revenue consists of consumer video and voice revenue. The decrease was due to a decrease in video revenue primarily driven by decreased video subscribers. Historically, GCI Holdings has seen declines in video and voice subscribers and revenue and expects a continued decrease as customers make decisions to move to alternative services. During the fourth quarter of 2024, it was announced that GCI Holdings plans to exit the video business in 2025, subject to regulatory approvals.

Business data revenue increased $45 million for the year ended December 31, 2024, as compared to the same period in 2023, primarily due to increased rates with health care and education customers due to service upgrades with existing customers. These increases were partially offset by decreases in business data subscribers.

Business wireless revenue decreased $4 million for the year ended December 31, 2024, as compared to the same period in 2023, primarily due to changes in the number of subscribers.

Business other revenue decreased $4 million for the year ended December 31, 2024, as compared to the same period in 2023. Business other revenue consists of business video and voice revenue. The decrease was primarily due to decreased local and long distance voice revenue as a result of decreased subscribers. Historically, GCI Holdings has seen declines in video and voice subscribers and revenue and has not focused business efforts on growth in these areas. During the fourth quarter of 2024, it was announced that GCI Holdings plans to exit the video business in 2025, subject to regulatory approvals.

 

89

 

Operating expense

Business direct costs consists of network distribution costs, largely to healthcare and education customers, as well as internal and outside labor costs for managing relationships with business customers. This expense increased $7 million for the year ended December 31, 2024, as compared to the same period in 2023, due to an increase in distribution costs relating to increased sales volume for healthcare and education customers, as well as labor costs related to revenue earning projects.

Consumer direct costs consists of wireless handset inventory costs, video programming, wireless distribution costs, marketing and advertising expenses, bad debt expense, credit card and other transactional fees, and internal and external labor costs for managing relationships with consumer customers. This expense remained flat for the year ended December 31, 2024, as compared to the same period in 2023.

Technology expense consists of field and technology operations costs incurred to manage the Company’s network, including internal and external labor costs, software related costs, lease expenses, maintenance costs, as well as utility costs. Technology expenses increased $8 million for the year ended December 31, 2024, as compared to the same period in 2023, due to an increase in internal labor and software costs, partially offset by a decrease in outside labor costs.

Other expense consists of corporate overhead costs largely consisting of internal and external labor costs, software costs, insurance expense, property taxes and professional service fees. Other expense increased $21 million for the year ended December 31, 2024, as compared to the same period in 2023, due to an increase in internal and external labor costs, and insurance expense.

Stock-based compensation decreased $6 million for the year ended December 31, 2024, as compared to the same period in 2023, due to multi-year grants fully vesting in the prior year. As of December 31, 2024, the total unrecognized compensation cost related to unvested Awards (as defined in note 9 to the accompanying combined financial statements) was approximately $9 million. Such amount will be recognized in the Company’s combined statements of operations over a weighted average period of approximately 1 year.

Depreciation and amortization decreased $23 million for the year ended December 31, 2024, as compared to the same period in 2023. The decrease was due to lower depreciation and amortization expense as certain fixed and intangible assets became fully depreciated and amortized during 2023.

Operating Income (Loss).   Combined operating income increased $28 million for the year ended December 31, 2024, as compared to the same period in 2023. Operating income was impacted by the above explanations.

Adjusted OIBDA.   To provide investors with additional information regarding our financial results, the Company also discloses Adjusted OIBDA, which is a non-GAAP financial measure. The Company defines Adjusted OIBDA as operating income (loss) plus depreciation and amortization, stock-based compensation, separately reported litigation settlements, restructuring, and impairment charges. The Company’s chief operating decision maker and management team use this measure of performance in conjunction with other measures to evaluate our businesses and make decisions about allocating resources among our businesses. The Company believes this is an important indicator of the operational strength and performance of its businesses by identifying those items that are not directly a reflection of each business’

 

90

 

performance or indicative of ongoing business trends. In addition, this measure allows management to view operating results, perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with U.S. generally accepted accounting principles. The following table provides a reconciliation of operating income (loss) to Adjusted OIBDA:

Combined Adjusted OIBDA decreased $1 million during the year ended December 31, 2024, as compared to the same period in 2023, due to the items discussed above.

Other Income and Expense

Components of Other income (expense) are presented in the table below.

Interest Expense.   Combined interest expense decreased $2 million during the year ended December 31, 2024, as compared to the same period in 2023. The decrease was driven by lower interest rates on the Company’s variable rate debt, partly offset by higher amounts outstanding on the Senior Credit Facility (as defined in note 5 to the accompanying combined financial statements).

Other, net.   Other, net income increased $2 million for the year ended December 31, 2024, as compared to the same period in 2023, primarily due to increased dividend and interest income.

Income taxes.   Earnings (losses) before income taxes and income tax (expense) benefit are as follows:

For the year ended December 31, 2024, the income tax expense was in excess of the expected federal tax expense primarily due to the effect of state income taxes, partially offset by federal tax credits.

For the year ended December 31, 2023, the income tax expense was in excess of the expected federal tax expense primarily due to state income taxes, certain non-deductible expenses and non-deductible executive compensation.

Net earnings (loss).   The Company had net earnings of $70 million and $41 million for the years ended December 31, 2024 and 2023, respectively. The change in net earnings (loss) was the result of the above-described fluctuations in our revenue, expenses, and other income and expenses.

 

91

 

Off-Balance Sheet Arrangements and Material Cash Requirements

We have contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business. Although it is reasonably possible we may incur losses upon conclusion of such matters, an estimate of any loss or range of loss cannot be made, except for any matters disclosed in notes 7 and 11 to the accompanying combined financial statements.

Information concerning the amount and timing of current and long-term material cash requirements, both accrued and off-balance sheet, excluding loss contingencies and uncertain tax positions, if any, where it is indeterminable when payments will be made, is summarized below:

(1)

Amounts are reflected in the table at the outstanding principal amount at December 31, 2024, assuming the debt instrument will remain outstanding until the stated maturity date and may differ from the amounts stated in our combined balance sheets to the extent debt instruments were issued at a discount or premium. Amounts do not assume additional borrowings or refinancings of existing debt.

​

(2)

Amounts (i) are based on our outstanding debt at December 31, 2024, (ii) assume the interest rates on our variable rate debt remain constant at the December 31, 2024 rates and (iii) assume that our existing debt is repaid at contractual maturity.

​

Liquidity and Capital Resources

As of December 31, 2024, substantially all of our cash and cash equivalents are invested in U.S. Treasury securities, other government securities or government guaranteed funds, AAA rated money market funds and other highly rated financial and corporate debt instruments.

The following are potential sources of liquidity: available cash balances, cash generated by the operating activities, outstanding or anticipated debt facilities (as discussed in note 5 to the accompany combined financial statements), and dividend and interest receipts and debt borrowings under the New Senior Credit Facility (as discussed in note 5 to the accompanying combined financial statements).

As of December 31, 2024, GCI Liberty had a cash and cash equivalents balance of $74 million.

The slight increase in cash provided by operating activities in 2024, as compared to the same period in 2023, was primarily driven by increased operating income and timing differences in working capital accounts (including litigation payments in 2023).

 

92

 

During the years ended December 31, 2024 and 2023, net cash flows used in investing activities were primarily related to capital expenditures, net of grant proceeds, of $193 million and $216 million, respectively.

During the year ended December 31, 2024 and 2023, net cash flows used in financing activities were primarily for dividends paid to Liberty Broadband of $150 million and $65 million, respectively, and net borrowings in 2024 of approximately $55 million on the Senior Credit Facility (as defined in note 5 to the accompanying combined financial statements).

The projected uses of our cash and restricted cash are debt repayment, net capital expenditures of approximately $250 million, approximately $60 million for interest payments on outstanding debt, to reimburse Liberty for amounts due under various agreements and to fund potential investment opportunities at GCI Liberty. We expect corporate cash and other available sources of liquidity as discussed above to cover corporate expenses for the foreseeable future.

GCI, LLC is in compliance with all debt maintenance covenants as of December 31, 2024. See note 5 to the accompanying combined financial statements for a description of all indebtedness obligations.

Critical Accounting Estimates

The preparation of our financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the accompanying combined financial statements and the reported amounts of revenue and expenses during the reporting period. Listed below are the accounting estimates and accounting policies that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions involved and the magnitude of the asset, liability, revenue or expense being reported. All of these accounting estimates and assumptions, as well as the resulting impact to our financial statements, have been discussed with our audit committee.

Fair Value of Non-Financial Instruments.   The Company’s non-financial instrument valuations are primarily comprised of its determination of the estimated fair value allocation of net tangible and identifiable intangible assets acquired in business combinations, the Company’s annual assessment of the recoverability of its goodwill and other nonamortizable intangibles, and the Company’s evaluation of the recoverability of its other long-lived assets upon certain triggering events.

The Company periodically reviews the carrying value of its intangible assets with definite lives and other long-lived assets to be used in operations whenever events or changes in circumstances indicate that the carrying amount of the assets or asset groups might not be recoverable. Factors that would necessitate an impairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in legal factors or the business climate that could affect the value of the asset group, or a significant decline in the observable market value of an asset group, among others. If such facts indicate a potential impairment, the recoverability of the asset group is assessed by determining whether the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the asset group over the remaining economic life of the asset group. If the carrying amount of the asset group is greater than the expected undiscounted cash flows to be generated by such asset group, including its ultimate disposition, an impairment adjustment is recognized.

If the carrying value of the Company’s amortizing intangible or long-lived assets exceeds their estimated fair value, the Company is required to write the carrying value down to fair value. Any such write down is included in impairment expense in the Company’s combined statements of operations. A high degree of judgment is required to estimate the fair value of the Company’s amortizing intangible and long-lived assets. The Company may use quoted market prices, prices for similar assets, present value techniques and other valuation techniques to prepare these estimates. The Company may need to make estimates of future cash flows and discount rates as well as other assumptions in order to implement these valuation techniques. Due to the high degree of judgment involved in our estimation techniques, any value ultimately derived from the Company’s amortizing intangible or long-lived assets may differ from its estimate of fair value.

 

93

 

The Company utilizes the cost approach as the primary method used to establish fair value for its property and equipment in connection with business combinations. The cost approach considers the amount required to replace an asset by constructing or purchasing a new asset with similar utility, then adjusts the value in consideration of physical depreciation and functional and technological obsolescence as of the appraisal date. The cost approach relies on management’s assumptions regarding current material and labor costs required to rebuild and repurchase significant components of the Company’s property and equipment along with assumptions regarding the age and estimated useful lives of its property and equipment.

The accounting guidance permits entities to first perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If the qualitative assessment supports that it is more likely than not that the carrying value of the Company’s indefinite-lived intangible assets, other than goodwill, exceeds its fair value, then a quantitative assessment is performed.

The Company utilizes an income approach as the primary method used to establish fair value for its customer relationships and cable certificates in connection with business combinations and annual impairment testing when deemed necessary. The income approach quantifies the expected earnings of the Company’s customer relationships and cable certificates, by isolating the after tax cash flows attributable to the respective asset and then discounting the cash flows to their present value. The income approach relies on management’s assumptions such as projected revenue, market penetration, expenses, capital expenditures, customer trends, and a discount rate applied to the estimated after tax cash flows.

The Company performs an annual assessment of the recoverability of its goodwill during the fourth quarter, or more frequently, if events and circumstances indicate impairment may have occurred. In evaluating goodwill on a qualitative basis, the Company reviews the business performance of each reporting unit and evaluates other relevant factors as identified in the relevant accounting guidance to determine whether it is more likely than not that an indicated impairment exists for any of its reporting units. The Company considers whether there are any negative macroeconomic conditions, industry specific conditions, market changes, increased competition, increased costs in doing business, management challenges, legal environments and how these factors might impact company specific performance in future periods. As part of the analysis, the Company also considers fair value determinations for certain reporting units that have been made at various points throughout the current and prior year for other purposes. If based on the qualitative analysis it is more likely than not that an impairment exists, the Company performs the quantitative impairment test.

The quantitative goodwill impairment test compares the estimated fair value of a reporting unit to its carrying value. The estimated fair value of a reporting unit has historically been determined using an income approach, when deemed necessary. The Company’s income approach model used for its reporting unit valuation is consistent with that used for the cable certificates except that cash flows from the entire business enterprise are used.

Income Taxes.   We are required to estimate the amount of tax payable or refundable for the current year and the deferred income tax liabilities and assets for the future tax consequences of events that have been reflected in our financial statements or tax returns for each taxing jurisdiction in which we operate. This process requires our management to make judgments regarding the timing and probability of the ultimate tax impact of the various agreements and transactions that we enter into. Based on these judgments we may record tax reserves or adjustments to valuation allowances on deferred tax assets to reflect the expected realizability of future tax benefits. Actual income taxes could vary from these estimates due to future changes in income tax law, significant changes in the jurisdictions in which we operate, our inability to generate sufficient future taxable income or unpredicted results from the final determination of each year’s liability by taxing authorities. These changes could have a significant impact on our financial position.

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk in the normal course of business due to our ongoing investing and financial activities. Market risk refers to the risk of loss arising from adverse changes in stock prices and interest rates. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. We have established policies, procedures and internal processes governing our management of market risks and the use of financial instruments to manage our exposure to such risks.

 

94

 

We are exposed to changes in interest rates primarily as a result of our borrowing and investment activities, which could include investments in fixed and floating rate debt instruments and borrowings used to maintain liquidity and to fund business operations. The nature and amount of our long-term and short-term debt are expected to vary as a result of future requirements, market conditions and other factors. We manage our exposure to interest rates by maintaining what we believe is an appropriate mix of fixed and variable rate debt. We believe this best protects us from interest rate risk. We could achieve this mix by (i) issuing fixed rate debt that we believe has a low stated interest rate and significant term to maturity, and (ii) issuing variable rate debt with appropriate maturities and interest rates.

As of December 31, 2024, our debt is comprised of the following amounts:

 

95

 

MANAGEMENT

The following section discusses the expected management of GCI Liberty immediately following the separation, including its directors and its executive officers, as well as certain related matters as required by the rules and regulations of the Securities and Exchange Commission. Following the separation, GCI Liberty expects that all matters relating to the management and oversight of the day-to-day business operations of GCI, LLC and GCI Holdings will remain as they presently exist and generally will not change.

Directors

The following sets forth certain information concerning persons who are expected to serve as the directors of GCI Liberty immediately following the separation, including their ages, directorships held and a description of their business experience, including, if applicable, current positions held with Liberty Broadband.

 

96

 

Executive Officers

The following sets forth certain information concerning persons (other than Mr. Duncan who is also expected to serve as a director of GCI Liberty and is described above) who are expected to serve as the executive officers of GCI Liberty immediately following the separation, including their ages, directorships held and a description of their business experience, including, if applicable, current positions held with Liberty Broadband.

Mr. Wendling and Ms. Wilm also serve as officers at Liberty Broadband and also provide services to QVC Group, Liberty Media and Liberty TripAdvisor pursuant to existing services agreements between such entities and Liberty Media. Notwithstanding the multiple roles to be served by these persons at GCI Liberty, Liberty Broadband and these other companies immediately following the separation, GCI Liberty and Liberty Broadband believe the officers described below are the most qualified and appropriate to serve in the roles set forth below immediately following the separation given such person’s in-depth knowledge of and experience with the business of GCI Liberty.

 

97

 

GCI Liberty’s executive officers will serve in such capacities until the first annual meeting of the GCI Liberty board, or until their respective successors have been duly elected and have been qualified, or until their earlier death, resignation, disqualification or removal from office. There is no family relationship between any of GCI Liberty’s executive officers or directors, by blood, marriage or adoption.

During the past ten years, none of the above persons has had any involvement in such legal proceedings as would be material to an evaluation of his or her ability or integrity.

Classification of Directors

Concurrently with the reclassification, the GCI Liberty board will be classified and divided into three classes, designated Class I, Class II and Class III. Immediately following the separation, the Class I directors are expected to be [      ] and they will initially serve for a term expiring at the first annual meeting of stockholders held following the separation. Immediately following the separation, the Class II directors are expected to be [      ] and they will initially serve for a term expiring at the second annual meeting of stockholders held following the separation. Immediately following the separation, the Class III directors are expected to be [      ] and they will initially serve for a term expiring at the third annual meeting of stockholders held following the separation. The members of each class will serve for a staggered three-year term. The GCI Liberty board is authorized to assign members of the board of directors already in office to their respective class. At each annual meeting of stockholders held after the separation, successors to the class of directors whose term expires at that annual meeting will be elected for a term expiring at the annual meeting of stockholders held in the third year following the year of their election and until the election and qualification of their respective successors.

Director Independence

It will be GCI Liberty’s policy that a majority of the members of its board will be independent of its management. For a director to be deemed independent, the GCI Liberty board must affirmatively determine that the director has no direct or indirect material relationship with the company. To assist the GCI Liberty board in determining which of its directors will qualify as independent, the nominating and corporate governance committee of GCI Liberty’s board is expected to follow the Corporate Governance Rules of Nasdaq on the criteria for director independence.

In accordance with these criteria, it is expected that the GCI Liberty board will determine that each of [      ] qualifies as an independent director of GCI Liberty.

Board Committees

It is expected that the GCI Liberty board will form the following committees: audit committee, compensation committee, nominating and corporate governance committee and executive committee, which will have comparable responsibilities to the corresponding committees of the Liberty Broadband board. It is currently contemplated that the members and chairmen of these committees (with the exception of the executive committee, which will not have a chairman) will be appointed prior to the completion of the separation. In addition, it is currently contemplated that the “audit committee financial expert” for purposes of the Exchange Act and the rules and regulations of Nasdaq will be designated at such time.

 

98

 

Board Composition

The GCI Liberty board will be comprised of directors with a broad range of backgrounds and skill sets, including in communications. Detailed information on GCI Liberty’s policies with respect to board candidates will be available following the establishment of the board’s nominating and corporate governance committee.

Compensation Committee Interlocks and Insider Participation

The GCI Liberty board does not currently have a compensation committee. It is expected that no member of GCI Liberty’s compensation committee (once formed) will be or will have been, during 2025, an officer or employee of GCI Liberty or Liberty Broadband. It is expected that no interlocking relationship will exist between the GCI Liberty board and its compensation committee and the board of directors or compensation committee of any other company.

 

99

 

EXECUTIVE COMPENSATION

The initial executive officers of GCI Liberty will be comprised of Ronald A. Duncan as Chief Executive Officer and President, Brian J. Wendling as Principal Financial Officer and Chief Accounting Officer, and Renee L. Wilm as Chief Legal Officer and Chief Administrative Officer. We are a newly formed company, and therefore, have not paid any compensation to any of our executive officers. Compensation decisions with respect to compensation to be paid by us to our executive officers following the separation will be made by the GCI Liberty compensation committee. As a GCI employee, Mr. Duncan’s Liberty Broadband RSUs that are outstanding as of the distribution date will be substituted for RSUs relating to GCI Group common stock, as described above in “The Separation — Treatment of Liberty Broadband Equity Awards — Liberty Broadband RSUs Held by GCI Employees,” and will be issued pursuant to the transitional plan, which is described under “— Equity Incentive Plans” below. Equity incentive awards granted by us to our executive officers following the separation will be granted pursuant to the GCI Liberty, Inc. 2025 Omnibus Incentive Plan, which is described under “— Equity Incentive Plans” below.

Chief Executive Officer Employment Agreement

GCI Communication Corp. (“GCI Corp”), which will become one of our subsidiaries in connection with the separation, is party to an employment agreement with Mr. Duncan (the “Duncan Employment Agreement”), which has a term that began on December 22, 2022 and which is scheduled to end on January 5, 2026. Pursuant to the Duncan Employment Agreement, Mr. Duncan is paid an annual base salary of $990,000 and has been, or is, eligible to participate in GCI Corp’s discretionary annual target cash incentive program (the “Target Cash IC Program”) pursuant to which Mr. Duncan is eligible to receive annual target cash incentive compensation of $1,252,741 in each calendar year from 2022 through 2025 (the “Duncan Annual Target Cash IC” or the “Duncan Cash IC”) and annual performance-based restricted stock unit grants with a target grant value of $626,371 in each of 2023, 2024 and 2025 (the “Duncan Annual Target Equity IC” or the “Duncan Equity IC”). Each of the Duncan Cash IC and Duncan Equity IC are subject to the achievement of annual performance metrics established annually by, prior to the separation, Liberty Broadband’s compensation committee and, immediately following the separation, our compensation committee.

Pursuant to the Duncan Employment Agreement, Mr. Duncan is eligible to participate in all health, welfare and retirement plans that are generally available to other similarly situated executives of GCI Corp. The Duncan Employment Agreement, together with the aircraft agreement (as defined below in “Certain Relationships and Related Party Transactions — Related Party Agreements Relating to GCI Liberty — Duncan Aircraft Agreement”), provides that Mr. Duncan is entitled to 100 hours per year of personal flight time on an aircraft leased by GCI Corp through the first to occur of  (i) the date that Mr. Duncan ceases to be employed by GCI Corp or any of its subsidiaries and (ii) the date that GCI Corp ceases to own or lease any aircraft. In the event of Mr. Duncan’s termination of employment other than for “cause” ​(as defined in the Duncan Employment Agreement) or due to Mr. Duncan’s death, Mr. Duncan would remain entitled to use up to one-third of such flight hours during the 120-day period following his termination. For additional information regarding the aircraft agreement, see “Certain Relationships and Related Party Transactions — Related Party Agreements Relating to GCI Liberty — Duncan Aircraft Agreement” below. In addition, pursuant to the Duncan Employment Agreement, Mr. Duncan may also access GCI Corp’s remote fishing retreat (the “retreat”) for occasional personal use and has limited contract rights to purchase the retreat at fair market value. In the event Mr. Duncan’s employment is terminated for any reason other than for cause or due to Mr. Duncan’s death, Mr. Duncan also would receive certain post-employment benefits for ten years, such as paid health insurance premiums, continued access to the retreat and continued ability to purchase the retreat on the same terms as described above. Mr. Duncan also would be provided office space and IT support for ten years post-employment.

Termination without “Cause” or for “Good Reason.”   If, prior to December 31, 2025, Mr. Duncan’s employment is terminated by him for “good reason” or by GCI Corp without “cause” ​(each as defined in the Duncan Employment Agreement), then Mr. Duncan would receive cash severance equal to the sum of,  (A) if not otherwise eligible to receive such amounts pursuant to the terms of program or award agreement under which such incentive compensation was granted, the Duncan Annual Target Cash IC and the Duncan Annual Target Equity IC for the year of termination (prorated based on his employment during the year),

 

100