Noncontrolling Interests (Notes)

12 Months Ended

Dec. 31, 2019

Noncontrolling interests represents consolidated subsidiaries of which the Company owns less than 100%. The Company is a holding company whose principal asset is a controlling equity interest in Charter Holdings, the indirect owner of the Company’s

cable systems. Noncontrolling interests on the Company’s balance sheet primarily includes A/N’s equity interests in Charter Holdings, which is comprised of a common ownership interest and a convertible preferred ownership interest.

As of December 31, 2019, A/N held 17.9 million Charter Holdings common units which are exchangeable at any time into either Charter Class A common stock on a one-for-one basis, or, at Charter’s option, cash, based on the then current market price of Charter Class A common stock. Net income (loss) of Charter Holdings attributable to A/N’s common noncontrolling interest for financial reporting purposes is based on the weighted average effective common ownership interest of approximately 8%, 8% and 9% and was $173 million, $125 million and $69 million for the years ended December 31, 2019, 2018 and 2017, respectively. Charter Holdings is required to make quarterly cash tax distributions (with annual true-ups) on a pro rata basis to its partners based on the partner with the highest proportionate cash tax requirement. To the extent such tax distributions would exceed Charter’s cash tax requirements, it may waive its entitlement to tax distributions and, instead, issue a non-pro rata "advance" to A/N, which will accrue interest at a money market rate and will reduce A/N’s exchange value into cash or Charter Class A common stock. Charter Holdings distributed $2 million to A/N as a pro rata tax distribution on its common units during the year ended December 31, 2019 and $3 million during each of the years ended December 31, 2018 and 2017.

The following table represents Charter Holdings' purchase of Charter Holdings common units from A/N pursuant to the Letter Agreement (see Note 20) and the effect on total shareholders' equity during the years ended December 31, 2019, 2018 and 2017.



	Year Ended December 31,
	2019			2018			2017
Number of units purchased	2,276,906			2,125,190			4,798,367
Average price per unit	$	388.72		$	308.90		$	347.03
Amount of units purchased	$	885		$	656		$	1,665
Decrease in noncontrolling interest based on carrying value	$	(565	)	$	(518	)	$	(1,187	)
Decrease in additional paid-in-capital, net of tax	$	(240	)	$	(104	)	$	(295	)

Total shareholders' equity was also adjusted during the years ended December 31, 2019, 2018 and 2017 due to changes in Charter Holdings' ownership as follows.



	Year Ended December 31,
	2019			2018			2017
Decrease in noncontrolling interest	$	(226	)	$	(72	)	$	(362	)
Increase in additional paid-in-capital, net of tax	$	170		$	54		$	223

The following table represents the exchange of Charter Holdings common units held by A/N for shares of Charter Class A common stock pursuant to the Letter Agreement (see Note 20) and the effect on total shareholders' equity during the year ended December 31, 2017. The exchange of A/N common units resulted in a step-up in the tax-basis of the assets of Charter Holdings which is further discussed in Note 17.



	Year Ended December 31, 2017
Number of units exchanged	1,263,497
Amount of units exchanged	$	400
Decrease in noncontrolling interest based on carrying value	$	(298	)
Increase in additional paid-in-capital, net of tax and TRA effects	$	265

As of December 31, 2019, A/N also held 25 million Charter Holdings convertible preferred units with a face amount of $2.5 billion that pays a 6% annual preferred dividend. The 6% annual preferred dividend is paid quarterly in cash, if and when declared, provided that, if dividends are suspended at any time, the dividends will accrue until they are paid. Net income (loss) of Charter

Holdings attributable to A/N's preferred noncontrolling interest for financial reporting purposes is based on the preferred dividend which was $150 million for each of the years ended December 31, 2019, 2018 and 2017. Each convertible preferred unit is convertible into either 0.37334 of a Charter Holdings common unit (if then held by A/N) or 0.37334 of a share of Charter Class A common stock (if then held by a third party), representing a conversion price of $267.85 per unit, based on a conversion feature as defined in the Limited Liability Company Agreement of Charter Holdings. After May 18, 2021, Charter may redeem the convertible preferred units if the price of Charter Class A common stock exceeds 130% of the conversion price, or $348.205 per unit. These Charter Holdings common and convertible preferred units held by A/N are recorded in noncontrolling interests as permanent equity in the consolidated balance sheet.