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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended March 31, 2016
OR
| ¨ | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the Transition Period from to
| Commission File Number | Registrant; State of Incorporation; Address and Telephone Number |
I.R.S. Employer Identification No. | ||
| 001-32871 | COMCAST CORPORATION | 27-0000798 | ||
| PENNSYLVANIA One Comcast Center Philadelphia, PA 19103-2838 (215) 286-1700 |
||||
| 001-36438 | NBCUNIVERSAL MEDIA, LLC | 14-1682529 | ||
| DELAWARE 30 Rockefeller Plaza New York, NY 10112-0015 (212) 664-4444 |
||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| Comcast Corporation |
Yes x |
No ¨ | ||
| NBCUniversal Media, LLC |
Yes x |
No ¨ |
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such period that the registrant was required to submit and post such files).
| Comcast Corporation |
Yes x |
No ¨ | ||
| NBCUniversal Media, LLC |
Yes x |
No ¨ |
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Comcast Corporation |
Large accelerated filer | x | Accelerated filer | ¨ | Non-accelerated filer | ¨ | Smaller reporting company | ¨ | ||||||||
| NBCUniversal Media, LLC |
Large accelerated filer | ¨ | Accelerated filer | ¨ | Non-accelerated filer | x | Smaller reporting company | ¨ |
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).
| Comcast Corporation |
Yes ¨ |
No x | ||
| NBCUniversal Media, LLC |
Yes ¨ |
No x |
Indicate the number of shares outstanding of each of the registrant’s classes of stock, as of the latest practical date:
As of March 31, 2016, there were 2,417,751,218 shares of Comcast Corporation Class A common stock and 9,444,375 shares of Comcast Corporation Class B common stock outstanding.
Not applicable for NBCUniversal Media, LLC.
NBCUniversal Media, LLC meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.
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Explanatory Note
This Quarterly Report on Form 10-Q is a combined report being filed separately by Comcast Corporation (“Comcast”) and NBCUniversal Media, LLC (“NBCUniversal”). Comcast owns all of the common equity interests in NBCUniversal, and NBCUniversal meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing its information within this Form 10-Q with the reduced disclosure format. Each of Comcast and NBCUniversal is filing on its own behalf the information contained in this report that relates to itself, and neither company makes any representation as to information relating to the other company. Where information or an explanation is provided that is substantially the same for each company, such information or explanation has been combined in this report. Where information or an explanation is not substantially the same for each company, separate information and explanation has been provided. In addition, separate condensed consolidated financial statements for each company, along with notes to the condensed consolidated financial statements, are included in this report. Unless indicated otherwise, throughout this Quarterly Report on Form 10-Q, we refer to Comcast and its consolidated subsidiaries, including NBCUniversal and its consolidated subsidiaries, as “we,” “us” and “our;” Comcast Cable Communications, LLC and its consolidated subsidiaries as “Comcast Cable;” Comcast Holdings Corporation as “Comcast Holdings;” and NBCUniversal, LLC as “NBCUniversal Holdings.”
This Quarterly Report on Form 10-Q is for the three months ended March 31, 2016. This Quarterly Report modifies and supersedes documents filed before it. The Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with it, which means that we can disclose important information to you by referring you directly to those documents. Information incorporated by reference is considered to be part of this Quarterly Report. In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this Quarterly Report.
You should carefully review the information contained in this Quarterly Report and particularly consider any risk factors set forth in this Quarterly Report and in other reports or documents that we file from time to time with the SEC. In this Quarterly Report, we state our beliefs of future events and of our future financial performance. In some cases, you can identify these so-called “forward-looking statements” by words such as “may,” “will,”
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“should,” “expects,” “believes,” “estimates,” “potential,” or “continue,” or the negative of those words, and other comparable words. You should be aware that these statements are only our predictions. In evaluating these statements, you should specifically consider various factors, including the risks outlined below and in other reports we file with the SEC. Actual events or our actual results may differ materially from any of our forward-looking statements. We undertake no obligation to update any forward-looking statements.
Our businesses may be affected by, among other things, the following:
| • | our businesses currently face a wide range of competition, and our businesses and results of operations could be adversely affected if we do not compete effectively |
| • | changes in consumer behavior driven by alternative methods for viewing content may adversely affect our businesses and challenge existing business models |
| • | a decline in advertisers’ expenditures or changes in advertising markets could negatively impact our businesses |
| • | our businesses depend on keeping pace with technological developments |
| • | we are subject to regulation by federal, state, local and foreign authorities, which may impose additional costs and restrictions on our businesses |
| • | changes to existing statutes, rules, regulations, or interpretations thereof, or adoption of new ones, could have an adverse effect on our businesses |
| • | programming expenses for our video services are increasing, which could adversely affect our Cable Communications segment’s video business |
| • | NBCUniversal’s success depends on consumer acceptance of its content, and its businesses may be adversely affected if its content fails to achieve sufficient consumer acceptance or the costs to create or acquire content increase |
| • | the loss of NBCUniversal’s programming distribution agreements, or the renewal of these agreements on less favorable terms, could adversely affect its businesses |
| • | we rely on network and information systems and other technologies, as well as key properties, and a disruption, cyber attack, failure or destruction of such networks, systems, technologies or properties may disrupt our businesses |
| • | we may be unable to obtain necessary hardware, software and operational support |
| • | weak economic conditions may have a negative impact on our businesses |
| • | our businesses depend on using and protecting certain intellectual property rights and on not infringing the intellectual property rights of others |
| • | acquisitions and other strategic initiatives present many risks, and we may not realize the financial and strategic goals that we had contemplated |
| • | labor disputes, whether involving employees or sports organizations, may disrupt our operations and adversely affect our businesses |
| • | the loss of key management personnel or popular on-air and creative talent could have an adverse effect on our businesses |
| • | we face risks relating to doing business internationally that could adversely affect our businesses |
| • | our Class B common stock has substantial voting rights and separate approval rights over several potentially material transactions, and our Chairman and CEO has considerable influence over our company through his beneficial ownership of our Class B common stock |
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PART I: FINANCIAL INFORMATION
Comcast Corporation
Condensed Consolidated Balance Sheet
(Unaudited)
| (in millions, except share data) | March 31, 2016 |
December 31, 2015 |
||||||
| Assets |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 5,628 | $ | 2,295 | ||||
| Receivables, net |
6,375 | 6,896 | ||||||
| Programming rights |
1,390 | 1,213 | ||||||
| Other current assets |
1,787 | 1,899 | ||||||
| Total current assets |
15,180 | 12,303 | ||||||
| Film and television costs |
5,768 | 5,855 | ||||||
| Investments |
3,638 | 3,224 | ||||||
| Property and equipment, net of accumulated depreciation of $48,611 and $48,100 |
34,122 | 33,665 | ||||||
| Franchise rights |
59,364 | 59,364 | ||||||
| Goodwill |
33,458 | 32,945 | ||||||
| Other intangible assets, net of accumulated amortization of $10,085 and $9,868 |
16,832 | 16,946 | ||||||
| Other noncurrent assets, net |
2,237 | 2,272 | ||||||
| Total assets |
$ | 170,599 | $ | 166,574 | ||||
| Liabilities and Equity |
||||||||
| Current Liabilities: |
||||||||
| Accounts payable and accrued expenses related to trade creditors |
$ | 6,333 | $ | 6,215 | ||||
| Accrued participations and residuals |
1,510 | 1,572 | ||||||
| Deferred revenue |
1,393 | 1,302 | ||||||
| Accrued expenses and other current liabilities |
5,729 | 5,462 | ||||||
| Current portion of long-term debt |
4,119 | 3,627 | ||||||
| Total current liabilities |
19,084 | 18,178 | ||||||
| Long-term debt, less current portion |
51,515 | 48,994 | ||||||
| Deferred income taxes |
33,821 | 33,566 | ||||||
| Other noncurrent liabilities |
10,431 | 10,637 | ||||||
| Commitments and contingencies (Note 11) |
||||||||
| Redeemable noncontrolling interests and redeemable subsidiary preferred stock |
1,236 | 1,221 | ||||||
| Equity: |
||||||||
| Preferred stock—authorized, 20,000,000 shares; issued, zero |
— | — | ||||||
| Class A common stock, $0.01 par value—authorized, 7,500,000,000 shares; issued, 2,854,146,732 and 2,869,349,502; outstanding, 2,417,751,218 and 2,432,953,988 |
29 | 29 | ||||||
| Class B common stock, $0.01 par value—authorized, 75,000,000 shares; issued and outstanding, 9,444,375 |
— | — | ||||||
| Additional paid-in capital |
38,464 | 38,518 | ||||||
| Retained earnings |
21,750 | 21,413 | ||||||
| Treasury stock, 436,395,514 Class A common shares |
(7,517 | ) | (7,517 | ) | ||||
| Accumulated other comprehensive income (loss) |
(84 | ) | (174 | ) | ||||
| Total Comcast Corporation shareholders’ equity |
52,642 | 52,269 | ||||||
| Noncontrolling interests |
1,870 | 1,709 | ||||||
| Total equity |
54,512 | 53,978 | ||||||
| Total liabilities and equity |
$ | 170,599 | $ | 166,574 | ||||
See accompanying notes to condensed consolidated financial statements.
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Comcast Corporation
Condensed Consolidated Statement of Income
(Unaudited)
| Three Months Ended March 31 |
||||||||
| (in millions, except per share data) | 2016 | 2015 | ||||||
| Revenue |
$ | 18,790 | $ | 17,853 | ||||
| Costs and Expenses: |
||||||||
| Programming and production |
5,431 | 5,463 | ||||||
| Other operating and administrative |
5,525 | 5,074 | ||||||
| Advertising, marketing and promotion |
1,467 | 1,360 | ||||||
| Depreciation |
1,785 | 1,634 | ||||||
| Amortization |
493 | 432 | ||||||
| 14,701 | 13,963 | |||||||
| Operating income |
4,089 | 3,890 | ||||||
| Other Income (Expense): |
||||||||
| Interest expense |
(703 | ) | (656 | ) | ||||
| Investment income (loss), net |
30 | 33 | ||||||
| Equity in net income (losses) of investees, net |
(11 | ) | 33 | |||||
| Other income (expense), net |
130 | 102 | ||||||
| (554 | ) | (488 | ) | |||||
| Income before income taxes |
3,535 | 3,402 | ||||||
| Income tax expense |
(1,311 | ) | (1,261 | ) | ||||
| Net income |
2,224 | 2,141 | ||||||
| Net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock |
(90 | ) | (82 | ) | ||||
| Net income attributable to Comcast Corporation |
$ | 2,134 | $ | 2,059 | ||||
| Basic earnings per common share attributable to Comcast Corporation shareholders |
$ | 0.88 | $ | 0.82 | ||||
| Diluted earnings per common share attributable to Comcast Corporation shareholders |
$ | 0.87 | $ | 0.81 | ||||
| Dividends declared per common share |
$ | 0.275 | $ | 0.25 | ||||
See accompanying notes to condensed consolidated financial statements.
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Comcast Corporation
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)
| Three Months Ended March 31 |
||||||||
| (in millions) | 2016 | 2015 | ||||||
| Net income |
$ | 2,224 | $ | 2,141 | ||||
| Unrealized gains (losses) on marketable securities, net of deferred taxes of $(1) and $— |
2 | — | ||||||
| Deferred gains (losses) on cash flow hedges, net of deferred taxes of $18 and $23 |
(31 | ) | (39 | ) | ||||
| Amounts reclassified to net income: |
||||||||
| Realized (gains) losses on marketable securities, net of deferred taxes of $1 and $— |
(1 | ) | — | |||||
| Realized (gains) losses on cash flow hedges, net of deferred taxes of $(10) and $(22) |
17 | 37 | ||||||
| Employee benefit obligations, net of deferred taxes of $(2) and $— |
2 | — | ||||||
| Currency translation adjustments, net of deferred taxes of $(58) and $23 |
238 | (55 | ) | |||||
| Comprehensive income |
2,451 | 2,084 | ||||||
| Net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock |
(90 | ) | (82 | ) | ||||
| Other comprehensive (income) loss attributable to noncontrolling interests |
(137 | ) | 15 | |||||
| Comprehensive income attributable to Comcast Corporation |
$ | 2,224 | $ | 2,017 | ||||
See accompanying notes to condensed consolidated financial statements.
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Comcast Corporation
Condensed Consolidated Statement of Cash Flows
(Unaudited)
| Three Months Ended March 31 |
||||||||
| (in millions) | 2016 | 2015 | ||||||
| Net cash provided by operating activities |
$ | 5,110 | $ | 5,245 | ||||
| Investing Activities |
||||||||
| Capital expenditures |
(1,885 | ) | (1,726 | ) | ||||
| Cash paid for intangible assets |
(378 | ) | (273 | ) | ||||
| Acquisitions and construction of real estate properties |
(140 | ) | (24 | ) | ||||
| Acquisitions, net of cash acquired |
(24 | ) | — | |||||
| Proceeds from sales of businesses and investments |
110 | 180 | ||||||
| Purchases of investments |
(448 | ) | (32 | ) | ||||
| Other |
56 | 181 | ||||||
| Net cash provided by (used in) investing activities |
(2,709 | ) | (1,694 | ) | ||||
| Financing Activities |
||||||||
| Proceeds from (repayments of) short-term borrowings, net |
(538 | ) | (150 | ) | ||||
| Proceeds from borrowings |
3,323 | — | ||||||
| Repurchases and repayments of debt |
(48 | ) | (909 | ) | ||||
| Repurchases and retirements of common stock |
(1,249 | ) | (2,000 | ) | ||||
| Dividends paid |
(611 | ) | (572 | ) | ||||
| Issuances of common stock |
12 | 28 | ||||||
| Distributions to noncontrolling interests and dividends for redeemable subsidiary preferred stock |
(77 | ) | (62 | ) | ||||
| Other |
120 | 141 | ||||||
| Net cash provided by (used in) financing activities |
932 | (3,524 | ) | |||||
| Increase (decrease) in cash and cash equivalents |
3,333 | 27 | ||||||
| Cash and cash equivalents, beginning of period |
2,295 | 3,910 | ||||||
| Cash and cash equivalents, end of period |
$ | 5,628 | $ | 3,937 | ||||
See accompanying notes to condensed consolidated financial statements.
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Comcast Corporation
Condensed Consolidated Statement of Changes in Equity
(Unaudited)
| Redeemable Noncontrolling Interests and Redeemable Subsidiary Preferred Stock |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Treasury Stock at Cost |
Accumulated Other Comprehensive Income (Loss) |
Non- controlling |
Total Equity |
|||||||||||||||||||||||||||||||||||||
| (in millions) | A | A Special | B | |||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2014 |
$ | 1,066 | $ | 25 | $ | 5 | $ | — | $ | 38,805 | $ | 21,539 | $ | (7,517 | ) | $ | (146 | ) | $ | 357 | $ | 53,068 | ||||||||||||||||||||||
| Stock compensation plans |
232 | (189 | ) | 43 | ||||||||||||||||||||||||||||||||||||||||
| Repurchases and retirements of common stock |
(407 | ) | (1,593 | ) | (2,000 | ) | ||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plans |
30 | 30 | ||||||||||||||||||||||||||||||||||||||||||
| Dividends declared |
(630 | ) | (630 | ) | ||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) |
(42 | ) | (15 | ) | (57 | ) | ||||||||||||||||||||||||||||||||||||||
| Contributions from (distributions to) noncontrolling interests, net |
(34 | ) | (34 | ) | ||||||||||||||||||||||||||||||||||||||||
| Other |
7 | (24 | ) | (24 | ) | |||||||||||||||||||||||||||||||||||||||
| Net income (loss) |
26 | 2,059 | 56 | 2,115 | ||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2015 |
$ | 1,099 | $ | 25 | $ | 5 | $ | — | $ | 38,660 | $ | 21,186 | $ | (7,517 | ) | $ | (188 | ) | $ | 340 | $ | 52,511 | ||||||||||||||||||||||
| Balance, December 31, 2015 |
$ | 1,221 | $ | 29 | $ | — | $ | — | $ | 38,518 | $ | 21,413 | $ | (7,517 | ) | $ | (174 | ) | $ | 1,709 | $ | 53,978 | ||||||||||||||||||||||
| Stock compensation plans |
176 | (137 | ) | 39 | ||||||||||||||||||||||||||||||||||||||||
| Repurchases and retirements of common stock |
(259 | ) | (990 | ) | (1,249 | ) | ||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plans |
33 | 33 | ||||||||||||||||||||||||||||||||||||||||||
| Dividends declared |
(670 | ) | (670 | ) | ||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) |
90 | 137 | 227 | |||||||||||||||||||||||||||||||||||||||||
| Contributions from (distributions to) noncontrolling interests, net |
(5 | ) | (36 | ) | (36 | ) | ||||||||||||||||||||||||||||||||||||||
| Other |
(10 | ) | (4 | ) | (4 | ) | ||||||||||||||||||||||||||||||||||||||
| Net income (loss) |
30 | 2,134 | 60 | 2,194 | ||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2016 |
$ | 1,236 | $ | 29 | $ | — | $ | — | $ | 38,464 | $ | 21,750 | $ | (7,517 | ) | $ | (84 | ) | $ | 1,870 | $ | 54,512 | ||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
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Comcast Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Condensed Consolidated Financial Statements
Basis of Presentation
We have prepared these unaudited condensed consolidated financial statements based on SEC rules that permit reduced disclosure for interim periods. These financial statements include all adjustments that are necessary for a fair presentation of our consolidated results of operations, financial condition and cash flows for the periods shown, including normal, recurring accruals and other items. The consolidated results of operations for the interim periods presented are not necessarily indicative of results for the full year.
The year-end condensed consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States (“GAAP”). For a more complete discussion of our accounting policies and certain other information, refer to our consolidated financial statements included in our 2015 Annual Report on Form 10-K.
Reclassifications
Reclassifications have been made to our condensed consolidated financial statements for the prior year period to conform to classifications used in 2016.
Note 2: Recent Accounting Pronouncements
Revenue Recognition
In May 2014, the Financial Accounting Standards Board (“FASB”) updated the accounting guidance related to revenue recognition. The updated accounting guidance provides a single, contract-based revenue recognition model to help improve financial reporting by providing clearer guidance on when an entity should recognize revenue and by reducing the number of standards to which an entity has to refer. The updated accounting guidance is effective for us as of January 1, 2018. The updated accounting guidance provides companies with alternative methods of adoption. We are currently in the process of determining the impact that the updated accounting guidance will have on our consolidated financial statements and our method of adoption.
Consolidations
In February 2015, the FASB updated the accounting guidance related to consolidation under the variable interest entity (“VIE”) and voting interest entity models. The updated accounting guidance modifies the consolidation guidance for VIEs, limited partnerships and similar legal entities. We have adopted this guidance as of January 1, 2016 and it did not have a material impact on our consolidated financial statements.
Financial Assets and Financial Liabilities
In January 2016, the FASB updated the accounting guidance related to the recognition and measurement of financial assets and financial liabilities. The updated accounting guidance, among other things, requires that all nonconsolidated equity investments, except those accounted for under the equity method, be measured at fair value and that the changes in fair value be recognized in net income. The updated guidance is effective for us as of January 1, 2018. The updated accounting guidance requires a cumulative effect adjustment to beginning retained earnings when the guidance is adopted with certain exceptions. We are currently in the process of determining the impact that the updated accounting guidance will have on our consolidated financial statements.
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Comcast Corporation
Leases
In February 2016, the FASB updated the accounting guidance related to leases. The updated accounting guidance requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. For a lessee, the recognition, measurement and presentation of expenses and cash flows arising from a lease do not significantly change from previous guidance. For a lessor, the accounting applied is also largely unchanged from previous guidance. The updated guidance is effective for us as of January 1, 2019 and early adoption is permitted. The updated accounting guidance must be adopted using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. We are currently in the process of determining the impact that the updated accounting guidance will have on our consolidated financial statements.
Share-Based Compensation
In March 2016, the FASB updated the accounting guidance that affects several aspects of the accounting for share-based compensation. The most significant change for us relates to the presentation of the income and withholding tax consequences of share-based compensation in our consolidated financial statements. Among the changes, the updated guidance requires that the excess income tax benefits or deficiencies that arise when the tax consequences of share-based compensation differ from amounts previously recognized in the statement of income be recognized as income tax benefit or expense in the statement of income rather than as additional paid-in capital in the balance sheet. The guidance also states that excess income tax benefits should not be presented separately from other income taxes in the statement of cash flows and, thus, should be classified as an operating activity rather than a financing activity as they are under the current guidance. In addition, the updated guidance requires when an employer withholds shares upon exercise of options or the vesting of restricted stock for the purpose of meeting withholding tax requirements, that the cash paid for withholding taxes be classified as a financing activity. We currently record these amounts within operating activities.
The updated guidance is effective for us as of January 1, 2017 and early adoption is permitted. The updated guidance provides companies with alternative methods of adoption, with certain items that are allowed to be applied retrospectively and certain other items that are only to be applied prospectively in the period of adoption. We are currently in the process of determining our method of adoption of this updated accounting guidance.
If we had adopted all provisions of the updated guidance as of January 1, 2016, it would have increased net income attributable to Comcast by $111 million and it would have increased net cash provided by operating activities and decreased net cash provided by (used in) financing activities each by $289 million for the three months ended March 31, 2016. The most significant impact of implementing the new guidance will occur in the first quarter of each year as a result of the vesting of restricted stock awards, which primarily occurs in March.
Note 3: Earnings Per Share
Computation of Diluted EPS
| Three Months Ended March 31 | ||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||
| (in millions, except per share data) | Net Income Attributable to Comcast Corporation |
Shares | Per Share Amount |
Net Income Attributable to Comcast Corporation |
Shares | Per Share Amount |
||||||||||||||||||
| Basic EPS attributable to Comcast Corporation shareholders |
$ | 2,134 | 2,434 | $ | 0.88 | $ | 2,059 | 2,520 | $ | 0.82 | ||||||||||||||
| Effect of dilutive securities: |
||||||||||||||||||||||||
| Assumed exercise or issuance of shares relating to stock plans |
28 | 36 | ||||||||||||||||||||||
| Diluted EPS attributable to Comcast Corporation shareholders |
$ | 2,134 | 2,462 | $ | 0.87 | $ | 2,059 | 2,556 | $ | 0.81 | ||||||||||||||
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Comcast Corporation
Diluted earnings per common share attributable to Comcast Corporation shareholders (“diluted EPS”) considers the impact of potentially dilutive securities using the treasury stock method. Our potentially dilutive securities include potential common shares related to our stock options and our restricted share units (“RSUs”). The amount of potential common shares related to our share-based compensation plans that were excluded from diluted EPS because their effect would have been antidilutive was not material for the three months ended March 31, 2016 and 2015.
Note 4: Significant Transactions
Universal Studios Japan
On November 13, 2015, NBCUniversal acquired a 51% economic interest in the Universal Studios theme park in Osaka, Japan (“Universal Studios Japan”) for $1.5 billion. The acquisition was funded through cash on hand and borrowings under our commercial paper program.
Universal Studios Japan is a VIE based on the governance structure and we consolidate Universal Studios Japan as we have the power to direct activities that most significantly impact its economic performance. There are no liquidity arrangements, guarantees, or other financial commitments between us and Universal Studios Japan, and therefore our maximum risk of financial loss is NBCUniversal’s 51% interest. Universal Studios Japan’s results of operations are reported in our Theme Parks segment following the acquisition date.
Preliminary Allocation of Purchase Price
Due to the limited amount of time since the date of acquisition, the assets and liabilities of Universal Studios Japan were recorded at their historical carrying value. We will adjust these amounts to fair value as valuations are completed and we obtain information necessary to complete the analyses, but no later than one year from the acquisition date. The 49% noncontrolling interest in Universal Studios Japan is recorded in the equity section of our consolidated financial statements and has been recorded based on the total value of Universal Studios Japan implied in the transaction. For purposes of this preliminary allocation, the excess of the total value implied in the transaction over the historical carrying value has been recorded as goodwill.
The table below presents the preliminary allocation of the purchase price to the assets and liabilities of Universal Studios Japan.
Preliminary Allocation of Purchase Price
| (in millions) | ||||
| Property and equipment |
$ | 642 | ||
| Intangible assets |
57 | |||
| Working capital |
(32 | ) | ||
| Debt |
(3,271 | ) | ||
| Other noncurrent assets and liabilities |
162 | |||
| Identifiable net assets (liabilities) acquired |
(2,442 | ) | ||
| Noncontrolling interest |
(1,440 | ) | ||
| Goodwill |
5,381 | |||
| Cash consideration transferred |
$ | 1,499 | ||
Actual and Unaudited Pro Forma Results
Our consolidated revenue and net income attributable to Comcast Corporation for the three months ended March 31, 2016 included $293 million and $18 million, respectively, from the acquisition of Universal Studios Japan.
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Comcast Corporation
The following unaudited pro forma information has been presented as if the acquisition occurred on January 1, 2014. This information is based on historical results of operations and is subject to change as valuations are completed and additional analysis is obtained. In addition, the unaudited pro forma accounting adjustments are not necessarily indicative of what our results would have been had we operated Universal Studios Japan since January 1, 2014. No pro forma adjustments have been made for our transaction-related expenses.
| (in millions, except per share amounts) | Three Months Ended March 31, 2015 |
|||
| Revenue |
$ | 18,137 | ||
| Net income |
$ | 2,191 | ||
| Net income attributable to Comcast Corporation |
$ | 2,084 | ||
| Basic earnings per common share attributable to Comcast Corporation shareholders |
$ | 0.83 | ||
| Diluted earnings per common share attributable to Comcast Corporation shareholders |
$ | 0.82 | ||
Note 5: Film and Television Costs
| (in millions) | March 31, 2016 |
December 31, 2015 |
||||||
| Film Costs: |
||||||||
| Released, less amortization |
$ | 1,238 | $ | 1,275 | ||||
| Completed, not released |
188 | 226 | ||||||
| In production and in development |
1,003 | 907 | ||||||
| 2,429 | 2,408 | |||||||
| Television Costs: |
||||||||
| Released, less amortization |
1,633 | 1,573 | ||||||
| In production and in development |
617 | 737 | ||||||
| 2,250 | 2,310 | |||||||
| Programming rights, less amortization |
2,479 | 2,350 | ||||||
| 7,158 | 7,068 | |||||||
| Less: Current portion of programming rights |
1,390 | 1,213 | ||||||
| Film and television costs |
$ | 5,768 | $ | 5,855 | ||||
Note 6: Investments
| (in millions) | March 31, 2016 |
December 31, 2015 |
||||||
| Fair Value Method |
$ | 165 | $ | 167 | ||||
| Equity Method: |
||||||||
| Atairos |
389 | — | ||||||
| Hulu |
159 | 184 | ||||||
| Other |
529 | 494 | ||||||
| 1,077 | 678 | |||||||
| Cost Method: |
||||||||
| AirTouch |
1,587 | 1,583 | ||||||
| Other |
884 | 902 | ||||||
| 2,471 | 2,485 | |||||||
| Total investments |
3,713 | 3,330 | ||||||
| Less: Current investments |
75 | 106 | ||||||
| Noncurrent investments |
$ | 3,638 | $ | 3,224 | ||||
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Investment Income (Loss), Net
| Three Months Ended March 31 |
||||||||
| (in millions) | 2016 | 2015 | ||||||
| Gains on sales and exchanges of investments, net |
$ | 2 | $ | — | ||||
| Investment impairment losses |
(20 | ) | (15 | ) | ||||
| Unrealized gains (losses) on securities underlying prepaid forward sale agreements |
— | 42 | ||||||
| Mark to market adjustments on derivative component of prepaid forward sale agreements and indexed debt instruments |
— | (38 | ) | |||||
| Interest and dividend income |
29 | 28 | ||||||
| Other, net |
19 | 16 | ||||||
| Investment income (loss), net |
$ | 30 | $ | 33 | ||||
Equity Method
The Weather Channel
On January 29, 2016, following a legal restructuring at The Weather Channel, we and the other investors sold the entity holding The Weather Channel’s product and technology businesses to IBM. Following the close of the transaction, we continue to hold an investment in The Weather Channel cable network through a new holding company. As a result of the sale of our investment, we recognized a pretax gain of $108 million in other income (expense), net.
Atairos
In 2015, we entered into an agreement to establish Atairos Group, Inc. (“Atairos”), a strategic company focused on investing in and operating companies in a range of industries and business sectors, both domestically and internationally. The agreement became effective as of January 1, 2016. Atairos has a term of up to 12 years and is controlled by management companies led by our former CFO through interests that carry all of the voting rights. We are the only investor other than our former CFO and the other management company employees. We have committed to fund up to $4 billion in the aggregate at any one time in Atairos, subject to certain offsets, and $40 million annually to fund a management fee, subject to certain adjustments, while the management company investors have committed to fund up to $100 million (with at least $40 million to be funded by our former CFO, subject to his continued role with Atairos). Our economic interests do not carry voting rights and obligate us to absorb approximately 99% of any losses and provide us the right to receive approximately 86.5% of any residual returns in Atairos, in either case on a cumulative basis.
We have concluded that Atairos is a VIE, that we do not have the power to direct the activities that most significantly impact the economic performance of Atairos as we have no voting rights and only certain consent rights, and that we are not related parties with our former CFO or the management companies. We therefore do not consolidate Atairos and account for this investment as an equity method investment. There are no other liquidity arrangements, guarantees, or other financial commitments between Comcast and Atairos, and therefore our maximum risk of financial loss is our investment balance and remaining unfunded capital commitment.
For the three months ended March 31, 2016, we provided capital contributions totaling $404 million to Atairos.
Hulu
For the three months ended March 31, 2016 and 2015, we recognized our proportionate share of losses of $25 million and $11 million, respectively, related to our investment in Hulu.
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Cost Method
AirTouch
We hold two series of preferred stock of Verizon Americas, Inc., formerly known as AirTouch Communications, Inc. (“AirTouch”), a subsidiary of Verizon Communications Inc., which are redeemable in April 2020. As of March 31, 2016, the estimated fair value of the AirTouch preferred stock and the estimated fair value of the associated liability related to the redeemable subsidiary preferred shares issued by one of our consolidated subsidiaries were each $1.7 billion. The estimated fair values are based on Level 2 inputs that use pricing models whose inputs are derived primarily from or corroborated by observable market data through correlation or other means for substantially the full term of the financial instrument.
Note 7: Long-Term Debt
As of March 31, 2016, our debt had a carrying value of $55.6 billion and an estimated fair value of $63.4 billion. The estimated fair value of our publicly traded debt is primarily based on Level 1 inputs that use quoted market values for the debt. The estimated fair value of debt for which there are no quoted market prices is based on Level 2 inputs that use interest rates available to us for debt with similar terms and remaining maturities.
Debt Borrowings and Repayments
In February and March 2016, we issued $1.1 billion aggregate principal amount of 2.75% senior notes due 2023 and $2.2 billion aggregate principal amount of 3.15% senior notes due 2026. We intend to use the proceeds from these offerings for working capital and general corporate purposes, which may include the repayment of debt.
In April 2016, we repaid at maturity $1 billion aggregate principal amount of 2.875% senior notes due 2016 and $700 million aggregate principal amount of NBCUniversal Enterprise Inc.’s (“NBCUniversal Enterprise”) senior notes due 2016.
Revolving Credit Facilities
As of March 31, 2016, amounts available under our consolidated revolving credit facilities, net of amounts outstanding under our commercial paper programs and outstanding letters of credit, totaled $6.9 billion, which included $900 million available under NBCUniversal Enterprise’s revolving credit facility.
Commercial Paper Programs
As of March 31, 2016, NBCUniversal Enterprise had $450 million face amount of commercial paper outstanding.
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Note 8: Fair Value Measurements
The accounting guidance related to financial assets and financial liabilities (“financial instruments”) establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). Level 1 consists of financial instruments whose values are based on quoted market prices for identical financial instruments in an active market. Level 2 consists of financial instruments that are valued using models or other valuation methodologies. These models use inputs that are observable either directly or indirectly. Level 3 consists of financial instruments whose values are determined using pricing models that use significant inputs that are primarily unobservable, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Our financial instruments that are accounted for at fair value on a recurring basis are presented in the table below.
Recurring Fair Value Measurements
| Fair Value as of | ||||||||||||||||||||
| March 31, 2016 |
December 31, 2015 |
|||||||||||||||||||
| (in millions) | Level 1 | Level 2 | Level 3 | Total | Total | |||||||||||||||
| Assets |
||||||||||||||||||||
| Trading securities |
$ | 15 | $ | — | $ | — | $ | 15 | $ | 22 | ||||||||||
| Available-for-sale securities |
— | 124 | 6 | 130 | 133 | |||||||||||||||
| Interest rate swap agreements |
— | 63 | — | 63 | 53 | |||||||||||||||
| Other |
— | 15 | 20 | 35 | 17 | |||||||||||||||
| Total |
$ | 15 | $ | 202 | $ | 26 | $ | 243 | $ | 225 | ||||||||||
| Liabilities |
||||||||||||||||||||
| Other |
$ | — | $ | 142 | $ | — | $ | 142 | $ | 91 | ||||||||||
| Total |
$ | — | $ | 142 | $ | — | $ | 142 | $ | 91 | ||||||||||
Fair Value of Redeemable Subsidiary Preferred Stock
As of March 31, 2016, the fair value of the NBCUniversal Enterprise redeemable subsidiary preferred stock was $757 million. The estimated fair value is based on Level 2 inputs that use pricing models whose inputs are derived primarily from or corroborated by observable market data through correlation or other means for substantially the full term of the financial instrument.
Note 9: Share-Based Compensation
Our share-based compensation plans primarily consist of awards of RSUs and stock options to certain employees and directors as part of our approach to long-term incentive compensation. Additionally, through our employee stock purchase plans, employees are able to purchase shares of Comcast Class A common stock at a discount through payroll deductions.
In March 2016, we granted 5.9 million RSUs and 20.7 million stock options related to our annual management awards. The weighted-average fair values associated with these grants were $59.50 per RSU and $11.45 per stock option.
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Recognized Share-Based Compensation Expense
| Three Months Ended March 31 |
||||||||
| (in millions) | 2016 | 2015 | ||||||
| Restricted share units |
$ | 70 | $ | 58 | ||||
| Stock options |
37 | 35 | ||||||
| Employee stock purchase plans |
8 | 8 | ||||||
| Total |
$ | 115 | $ | 101 | ||||
As of March 31, 2016, we had unrecognized pretax compensation expense of $903 million and $496 million related to nonvested RSUs and nonvested stock options, respectively.
Note 10: Supplemental Financial Information
Receivables
| (in millions) | March 31, 2016 |
December 31, 2015 |
||||||
| Receivables, gross |
$ | 6,952 | $ | 7,595 | ||||
| Less: Allowance for returns and customer incentives |
359 | 473 | ||||||
| Less: Allowance for doubtful accounts |
218 | 226 | ||||||
| Receivables, net |
$ | 6,375 | $ | 6,896 | ||||
Accumulated Other Comprehensive Income (Loss)
| (in millions) | March 31, 2016 |
March 31, 2015 |
||||||
| Unrealized gains (losses) on marketable securities |
$ | 2 | $ | 1 | ||||
| Deferred gains (losses) on cash flow hedges |
(60 | ) | (6 | ) | ||||
| Unrecognized gains (losses) on employee benefit obligations |
8 | (68 | ) | |||||
| Cumulative translation adjustments |
(34 | ) | (115 | ) | ||||
| Accumulated other comprehensive income (loss), net of deferred taxes |
$ | (84 | ) | $ | (188 | ) | ||
Net Cash Provided by Operating Activities
| Three Months Ended March 31 |
||||||||
| (in millions) | 2016 | 2015 | ||||||
| Net income |
$ | 2,224 | $ | 2,141 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
2,278 | 2,066 | ||||||
| Share-based compensation |
153 | 135 | ||||||
| Noncash interest expense (income), net |
55 | 51 | ||||||
| Equity in net (income) losses of investees, net |
11 | (33 | ) | |||||
| Cash received from investees |
16 | 22 | ||||||
| Net (gain) loss on investment activity and other |
(126 | ) | (121 | ) | ||||
| Deferred income taxes |
217 | (119 | ) | |||||
| Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: |
||||||||
| Current and noncurrent receivables, net |
562 | 119 | ||||||
| Film and television costs, net |
(80 | ) | (38 | ) | ||||
| Accounts payable and accrued expenses related to trade creditors |
12 | 372 | ||||||
| Other operating assets and liabilities |
(212 | ) | 650 | |||||
| Net cash provided by operating activities |
$ | 5,110 | $ | 5,245 | ||||
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Cash Payments for Interest and Income Taxes
| Three Months Ended March 31 |
||||||||
| (in millions) | 2016 | 2015 | ||||||
| Interest |
$ | 723 | $ | 691 | ||||
| Income taxes |
$ | 190 | $ | 118 | ||||
Noncash Investing and Financing Activities
During the three months ended March 31, 2016:
| • | we acquired $1.1 billion of property and equipment and intangible assets that were accrued but unpaid |
| • | we recorded a liability of $670 million for a quarterly cash dividend of $0.275 per common share to be paid in April 2016 |
Note 11: Commitments and Contingencies
Split-Dollar Life Insurance Agreements
As previously disclosed, in connection with the passing of our founder, Ralph J. Roberts, we made a lump sum payment in April 2016 to settle all of the benefit obligation liabilities related to split-dollar life insurance agreements with him. In connection with this settlement, in the second quarter of 2016 we will record an operating expense of $116 million and will eliminate substantially all of our liabilities related to split-dollar agreements, which are disclosed in Note 12 of our consolidated financial statements included in our 2015 Annual Report on Form 10-K.
Contingencies
We are a defendant in several unrelated lawsuits claiming infringement of various patents relating to various aspects of our businesses. In certain of these cases other industry participants are also defendants, and also in certain of these cases we expect that any potential liability would be in part or in whole the responsibility of our equipment and technology vendors under applicable contractual indemnification provisions.
We are also subject to other legal proceedings and claims that arise in the ordinary course of our business. While the amount of ultimate liability with respect to such actions is not expected to materially affect our results of operations, cash flows or financial position, any litigation resulting from any such legal proceedings or claims could be time-consuming and injure our reputation.
Note 12: Financial Data by Business Segment
We present our operations in five reportable business segments:
| • | Cable Communications: Consists of the operations of Comcast Cable, which is one of the nation’s largest providers of video, high-speed Internet and voice services to residential customers under the XFINITY brand; we also provide these and other services to business customers and sell advertising. |
| • | Cable Networks: Consists primarily of our national cable networks, our regional sports and news networks, our international cable networks and our cable television studio production operations. |
| • | Broadcast Television: Consists primarily of the NBC and Telemundo broadcast networks, our NBC and Telemundo owned local broadcast television stations, the NBC Universo national cable network, and our broadcast television studio production operations. |
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| • | Filmed Entertainment: Consists primarily of the operations of Universal Pictures, which produces, acquires, markets and distributes filmed entertainment worldwide. |
| • | Theme Parks: Consists primarily of our Universal theme parks in Orlando, Florida; Hollywood, California; and Osaka, Japan. |
In evaluating the profitability of our operating segments, the components of net income (loss) below operating income (loss) before depreciation and amortization are not separately evaluated by our management. Our financial data by business segment is presented in the tables below.
| Three Months Ended March 31, 2016 | ||||||||||||||||||||
| (in millions) | Revenue(g) | Operating Income (Loss) Before Depreciation and Amortization(h) |
Depreciation and Amortization |
Operating Income (Loss) |
Capital Expenditures |
|||||||||||||||
| Cable Communications(a)(b) |
$ | 12,204 | $ | 4,889 | $ | 1,843 | $ | 3,046 | $ | 1,576 | ||||||||||
| NBCUniversal |
||||||||||||||||||||
| Cable Networks |
2,453 | 956 | 190 | 766 | 1 | |||||||||||||||
| Broadcast Television |
2,084 | 284 | 32 | 252 | 19 | |||||||||||||||
| Filmed Entertainment |
1,383 | 167 | 8 | 159 | 3 | |||||||||||||||
| Theme Parks(d) |
1,026 | 375 | 98 | 277 | 200 | |||||||||||||||
| Headquarters and Other(e) |
3 | (160 | ) | 86 | (246 | ) | 72 | |||||||||||||
| Eliminations(f) |
(88 | ) | — | — | — | — | ||||||||||||||
| NBCUniversal |
6,861 | 1,622 | 414 | 1,208 | 295 | |||||||||||||||
| Corporate and Other(b) |
199 | (154 | ) | 21 | (175 | ) | 14 | |||||||||||||
| Eliminations(d)(f) |
(474 | ) | 10 | — | 10 | — | ||||||||||||||
| Comcast Consolidated |
$ | 18,790 | $ | 6,367 | $ | 2,278 | $ | 4,089 | $ | 1,885 | ||||||||||
| Three Months Ended March 31, 2015 | ||||||||||||||||||||
| (in millions) | Revenue(g) | Operating Income (Loss) Before Depreciation and Amortization(h) |
Depreciation and Amortization |
Operating Income (Loss) |
Capital Expenditures |
|||||||||||||||
| Cable Communications(a)(b) |
$ | 11,441 | $ | 4,658 | $ | 1,680 | $ | 2,978 | $ | 1,446 | ||||||||||
| NBCUniversal |
||||||||||||||||||||
| Cable Networks |
2,359 | 898 | 184 | 714 | 6 | |||||||||||||||
| Broadcast Television(c) |
2,248 | 182 | 29 | 153 | 11 | |||||||||||||||
| Filmed Entertainment |
1,446 | 293 | 5 | 288 | 1 | |||||||||||||||
| Theme Parks(d) |
651 | 244 | 66 | 178 | 162 | |||||||||||||||
| Headquarters and Other(e) |
4 | (140 | ) | 80 | (220 | ) | 88 | |||||||||||||
| Eliminations(f) |
(104 | ) | (2 | ) | — | (2 | ) | — | ||||||||||||
| NBCUniversal |
6,604 | 1,475 | 364 | 1,111 | 268 | |||||||||||||||
| Corporate and Other(b) |
193 | (209 | ) | 22 | (231 | ) | 12 | |||||||||||||
| Eliminations(d)(f) |
(385 | ) | 32 | — | 32 | — | ||||||||||||||
| Comcast Consolidated |
$ | 17,853 | $ | 5,956 | $ | 2,066 | $ | 3,890 | $ | 1,726 | ||||||||||
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| (a) | For the three months ended March 31, 2016 and 2015, Cable Communications segment revenue was derived from the following sources: |
| Three Months Ended March 31 |
||||||||
| 2016 | 2015 | |||||||
| Residential: |
||||||||
| Video |
45.4 | % | 46.6 | % | ||||
| High-speed Internet |
26.8 | % | 26.6 | % | ||||
| Voice |
7.3 | % | 7.9 | % | ||||
| Business services |
10.7 | % | 9.8 | % | ||||
| Advertising |
4.6 | % | 4.4 | % | ||||
| Other |
5.2 | % | 4.7 | % | ||||
| Total |
100.0 | % | 100.0 | % | ||||
Subscription revenue received from customers who purchase bundled services at a discounted rate is allocated proportionally to each service based on the individual service’s price on a stand-alone basis.
For the three months ended March 31, 2016 and 2015, 2.9% and 2.8%, respectively, of Cable Communications segment revenue was derived from franchise and other regulatory fees.
| (b) | Beginning in the first quarter of 2016, certain operations and businesses, including several strategic business initiatives, that were previously presented in Corporate and Other are now presented in our Cable Communications segment to reflect a change in our management reporting presentation. For segment reporting purposes, we have adjusted all periods presented to reflect this change. |
| (c) | The revenue and operating costs and expenses associated with our broadcast of the 2015 Super Bowl were reported in our Broadcast Television segment. |
| (d) | Beginning in the fourth quarter of 2015, we changed our method of accounting for a contractual obligation that involves an interest in the revenue of certain theme parks. As a result of the change, amounts payable based on current period revenue are presented in operating costs and expenses. Amounts paid through the third quarter of 2015 were included in other income (expense), net in our consolidated statement of income. For segment reporting purposes, we have adjusted periods prior to the fourth quarter of 2015 to reflect management reporting presentation for this expense on a consistent basis for all periods in the Theme Parks segment and total NBCUniversal, which resulted in a corresponding offsetting adjustment in Eliminations to reconcile to consolidated totals. |
| (e) | NBCUniversal Headquarters and Other activities include costs associated with overhead, personnel costs and headquarter initiatives. |
| (f) | Included in Eliminations are transactions that our segments enter into with one another. The most common types of transactions are the following: |
| • | our Cable Networks segment generates revenue by selling programming to our Cable Communications segment, which represents a substantial majority of the revenue elimination amount |
| • | our Broadcast Television segment generates revenue from the fees received under retransmission consent agreements with our Cable Communications segment |
| • | our Cable Communications segment generates revenue by selling advertising and by selling the use of satellite feeds to our Cable Networks segment |
| • | our Filmed Entertainment and Broadcast Television segments generate revenue by licensing content to our Cable Networks segment |
| (g) | No single customer accounted for a significant amount of revenue in any period. |
| (h) | We use operating income (loss) before depreciation and amortization, excluding impairment charges related to fixed and intangible assets and gains or losses on the sale of assets, if any, as the measure of profit or loss for our operating segments. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of certain of our businesses and from intangible assets recognized in business combinations. Additionally, it is unaffected by our capital structure or investment activities. We use this measure to evaluate our consolidated operating performance and the operating performance of our operating segments and to allocate resources and capital to our operating segments. It is also a significant performance measure in our annual incentive compensation programs. We believe that this measure is useful to investors because it is one of the bases for comparing our operating performance with that of other companies in our industries, although our measure may not be directly comparable to similar measures used by other companies. This measure should not be considered a substitute for operating income (loss), net income (loss) attributable to Comcast Corporation, net cash provided by operating activities, or other measures of performance or liquidity we have reported in accordance with GAAP. |
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Note 13: Condensed Consolidating Financial Information
Comcast (“Comcast Parent”), Comcast Cable Communications, LLC (“CCCL Parent”), and NBCUniversal (“NBCUniversal Media Parent”) have fully and unconditionally guaranteed each other’s debt securities. In addition, the Comcast and Comcast Cable Communications, LLC $6.25 billion revolving credit facility due 2017 (the “Comcast revolving credit facility”) and the Comcast commercial paper program are also fully and unconditionally guaranteed by NBCUniversal. The Comcast commercial paper program is supported by the Comcast revolving credit facility.
Comcast Parent and CCCL Parent also fully and unconditionally guarantee NBCUniversal Enterprise’s $4 billion senior notes, as well as the NBCUniversal Enterprise revolving credit facility and the associated commercial paper program. NBCUniversal Media Parent does not guarantee the NBCUniversal Enterprise senior notes, credit facility or commercial paper program.
Comcast Parent provides an unconditional subordinated guarantee of the $185 million principal amount currently outstanding of Comcast Holdings’ ZONES due October 2029. Neither CCCL Parent nor NBCUniversal Media Parent guarantee the Comcast Holdings’ ZONES due October 2029. None of Comcast Parent, CCCL Parent nor NBCUniversal Media Parent guarantee the $62 million principal amount currently outstanding of Comcast Holdings’ ZONES due November 2029 or the $3.5 billion of Universal Studios Japan term loans.
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Condensed Consolidating Balance Sheet
March 31, 2016
| (in millions) | Comcast Parent |
Comcast Holdings |
CCCL Parent |
NBCUniversal Media Parent |
Non- Guarantor Subsidiaries |
Elimination and Consolidation Adjustments |
Consolidated Comcast Corporation |
|||||||||||||||||||||
| Assets |
||||||||||||||||||||||||||||
| Cash and cash equivalents |
$ | — | $ | — | $ | — | $ | 178 | $ | 5,450 | $ | — | $ | 5,628 | ||||||||||||||
| Receivables, net |
— | — | — | — | 6,375 | — | 6,375 | |||||||||||||||||||||
| Programming rights |
— | — | — | — | 1,390 | — | 1,390 | |||||||||||||||||||||
| Other current assets |
74 | — | — | 24 | 1,689 | — | 1,787 | |||||||||||||||||||||
| Total current assets |
74 | — | — | 202 | 14,904 | — | 15,180 | |||||||||||||||||||||
| Film and television costs |
— | — | — | — | 5,768 | — | 5,768 | |||||||||||||||||||||
| Investments |
41 | — | — | 442 | 3,155 | — | 3,638 | |||||||||||||||||||||
| Investments in and amounts due from subsidiaries eliminated upon consolidation |
90,281 | 113,635 | 121,305 | 43,623 | 110,013 | (478,857 | ) | — | ||||||||||||||||||||
| Property and equipment, net |
211 | — | — | — | 33,911 | — | 34,122 | |||||||||||||||||||||
| Franchise rights |
— | — | — | — | 59,364 | — | 59,364 | |||||||||||||||||||||
| Goodwill |
— | — | — | — | 33,458 | — | 33,458 | |||||||||||||||||||||
| Other intangible assets, net |
11 | — | — | — | 16,821 | — | 16,832 | |||||||||||||||||||||
| Other noncurrent assets, net |
1,258 | 147 | — | 83 | 2,059 | (1,310 | ) | 2,237 | ||||||||||||||||||||
| Total assets |
$ | 91,876 | $ | 113,782 | $ | 121,305 | $ | 44,350 | $ | 279,453 | $ | (480,167 | ) | $ | 170,599 | |||||||||||||
| Liabilities and Equity |
||||||||||||||||||||||||||||
| Accounts payable and accrued expenses related to trade creditors |
$ | 27 | $ | — | $ | — | $ | — | $ | 6,306 | $ | — | $ | 6,333 | ||||||||||||||
| Accrued participations and residuals |
— | — | — | — | 1,510 | — | 1,510 | |||||||||||||||||||||
| Accrued expenses and other current liabilities |
1,795 | 335 | 405 | 371 | 4,216 | — | 7,122 | |||||||||||||||||||||
| Current portion of long-term debt |
1,749 | — | — | 1,004 | 1,366 | — | 4,119 | |||||||||||||||||||||
| Total current liabilities |
3,571 | 335 | 405 | 1,375 | 13,398 | — | 19,084 | |||||||||||||||||||||
| Long-term debt, less current portion |
33,406 | 131 | 2,650 | 8,208 | 7,120 | — | 51,515 | |||||||||||||||||||||
| Deferred income taxes |
— | 624 | — | 68 | 34,293 | (1,164 | ) | 33,821 | ||||||||||||||||||||
| Other noncurrent liabilities |
2,257 | — | — | 1,125 | 7,195 | (146 | ) | 10,431 | ||||||||||||||||||||
| Redeemable noncontrolling interests and redeemable subsidiary preferred stock |
— | — | — | — | 1,236 | — | 1,236 | |||||||||||||||||||||
| Equity: |
||||||||||||||||||||||||||||
| Common stock |
29 | — | — | — | — | — | 29 | |||||||||||||||||||||
| Other shareholders’ equity |
52,613 | 112,692 | 118,250 | 33,574 | 214,341 | (478,857 | ) | 52,613 | ||||||||||||||||||||
| Total Comcast Corporation shareholders’ equity |
52,642 | 112,692 | 118,250 | 33,574 | 214,341 | (478,857 | ) | 52,642 | ||||||||||||||||||||
| Noncontrolling interests |
— | — | — | — | 1,870 | — | 1,870 | |||||||||||||||||||||
| Total equity |
52,642 | 112,692 | 118,250 | 33,574 | 216,211 | (478,857 | ) | 54,512 | ||||||||||||||||||||
| Total liabilities and equity |
$ | 91,876 | $ | 113,782 | $ | 121,305 | $ | 44,350 | $ | 279,453 | $ | (480,167 | ) | $ | 170,599 | |||||||||||||
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Comcast Corporation
Condensed Consolidating Balance Sheet
December 31, 2015
| (in millions) | Comcast Parent |
Comcast Holdings |
CCCL Parent |
NBCUniversal Media Parent |
Non- Guarantor Subsidiaries |
Elimination and Consolidation Adjustments |
Consolidated Comcast Corporation |
|||||||||||||||||||||
| Assets |
||||||||||||||||||||||||||||
| Cash and cash equivalents |
$ | — | $ | — | $ | — | $ | 414 | $ | 1,881 | $ | — | $ | 2,295 | ||||||||||||||
| Receivables, net |
— | — | — | — | 6,896 | — | 6,896 | |||||||||||||||||||||
| Programming rights |
— | — | — | — | 1,213 | — | 1,213 | |||||||||||||||||||||
| Other current assets |
69 | — | — | 17 | 1,813 | — | 1,899 | |||||||||||||||||||||
| Total current assets |
69 | — | — | 431 | 11,803 | — | 12,303 | |||||||||||||||||||||
| Film and television costs |
— | — | — | — | 5,855 | — | 5,855 | |||||||||||||||||||||
| Investments |
33 | — | — | 430 | 2,761 | — | 3,224 | |||||||||||||||||||||
| Investments in and amounts due from subsidiaries eliminated upon consolidation |
87,142 | 111,241 | 119,354 | 42,441 | 109,598 | (469,776 | ) | — | ||||||||||||||||||||
| Property and equipment, net |
210 | — | — | — | 33,455 | — | 33,665 | |||||||||||||||||||||
| Franchise rights |
— | — | — | — | 59,364 | — | 59,364 | |||||||||||||||||||||
| Goodwill |
— | — | — | — | 32,945 | — | 32,945 | |||||||||||||||||||||
| Other intangible assets, net |
12 | — | — | — | 16,934 | — | 16,946 | |||||||||||||||||||||
| Other noncurrent assets, net |
1,301 | 147 | — | 78 | 2,114 | (1,368 | ) | 2,272 | ||||||||||||||||||||
| Total assets |
$ | 88,767 | $ | 111,388 | $ | 119,354 | $ | 43,380 | $ | 274,829 | $ | (471,144 | ) | $ | 166,574 | |||||||||||||
| Liabilities and Equity |
||||||||||||||||||||||||||||
| Accounts payable and accrued expenses related to trade creditors |
$ | 16 | $ | — | $ | — | $ | — | $ | 6,199 | $ | — | $ | 6,215 | ||||||||||||||
| Accrued participations and residuals |
— | — | — | — | 1,572 | — | 1,572 | |||||||||||||||||||||
| Accrued expenses and other current liabilities |
1,789 | 335 | 290 | 389 | 3,961 | — | 6,764 | |||||||||||||||||||||
| Current portion of long-term debt |
1,149 | — | — | 1,005 | 1,473 | — | 3,627 | |||||||||||||||||||||
| Total current liabilities |
2,954 | 335 | 290 | 1,394 | 13,205 | — | 18,178 | |||||||||||||||||||||
| Long-term debt, less current portion |
31,106 | 130 | 2,650 | 8,211 | 6,897 | — | 48,994 | |||||||||||||||||||||
| Deferred income taxes |
— | 624 | — | 66 | 34,098 | (1,222 | ) | 33,566 | ||||||||||||||||||||
| Other noncurrent liabilities |
2,438 | — | — | 1,087 | 7,258 | (146 | ) | 10,637 | ||||||||||||||||||||
| Redeemable noncontrolling interests and redeemable subsidiary preferred stock |
— | — | — | — | 1,221 | — | 1,221 | |||||||||||||||||||||
| Equity: |
||||||||||||||||||||||||||||
| Common stock |
29 | — | — | — | — | — | 29 | |||||||||||||||||||||
| Other shareholders’ equity |
52,240 | 110,299 | 116,414 | 32,622 | 210,441 | (469,776 | ) | 52,240 | ||||||||||||||||||||
| Total Comcast Corporation shareholders’ equity |
52,269 | 110,299 | 116,414 | 32,622 | 210,441 | (469,776 | ) | 52,269 | ||||||||||||||||||||
| Noncontrolling interests |
— | — | — | — | 1,709 | — | 1,709 | |||||||||||||||||||||
| Total equity |
52,269 | 110,299 | 116,414 | 32,622 | 212,150 | (469,776 | ) | 53,978 | ||||||||||||||||||||
| Total liabilities and equity |
$ | 88,767 | $ | 111,388 | $ | 119,354 | $ | 43,380 | $ | 274,829 | $ | (471,144 | ) | $ | 166,574 | |||||||||||||
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Comcast Corporation
Condensed Consolidating Statement of Income
For the Three Months Ended March 31, 2016
| (in millions) | Comcast Parent |
Comcast Holdings |
CCCL Parent |
NBCUniversal Media Parent |
Non- Guarantor Subsidiaries |
Elimination and Consolidation Adjustments |
Consolidated Comcast Corporation |
|||||||||||||||||||||
| Revenue: |
||||||||||||||||||||||||||||
| Service revenue |
$ | — | $ | — | $ | — | $ | — | $ | 18,790 | $ | — | $ | 18,790 | ||||||||||||||
| Management fee revenue |
259 | — | 254 | — | — | (513 | ) | — | ||||||||||||||||||||
| 259 | — | 254 | — | 18,790 | (513 | ) | 18,790 | |||||||||||||||||||||
| Costs and Expenses: |
||||||||||||||||||||||||||||
| Programming and production |
— | — | — | — | 5,431 | — | 5,431 | |||||||||||||||||||||
| Other operating and administrative |
156 | — | 254 | 295 | 5,333 | (513 | ) | 5,525 | ||||||||||||||||||||
| Advertising, marketing and promotion |
— | — | — | — | 1,467 | — | 1,467 | |||||||||||||||||||||
| Depreciation |
8 | — | — | — | 1,777 | — | 1,785 | |||||||||||||||||||||
| Amortization |
1 | — | — | — | 492 | — | 493 | |||||||||||||||||||||
| 165 | — | 254 | 295 | 14,500 | (513 | ) | 14,701 | |||||||||||||||||||||
| Operating income (loss) |
94 | — | — | (295 | ) | 4,290 | — | 4,089 | ||||||||||||||||||||
| Other Income (Expense): |
||||||||||||||||||||||||||||
| Interest expense |
(451 | ) | (3 | ) | (59 | ) | (117 | ) | (73 | ) | — | (703 | ) | |||||||||||||||
| Investment income (loss), net |
— | — | — | (2 | ) | 32 | — | 30 | ||||||||||||||||||||
| Equity in net income (losses) of investees, net |
2,366 | 2,264 | 2,114 | 1,297 | 991 | (9,043 | ) | (11 | ) | |||||||||||||||||||
| Other income (expense), net |
— | — | — | 124 | 6 | — | 130 | |||||||||||||||||||||
| 1,915 | 2,261 | 2,055 | 1,302 | 956 | (9,043 | ) | (554 | ) | ||||||||||||||||||||
| Income (loss) before income taxes |
2,009 | 2,261 | 2,055 | 1,007 | 5,246 | (9,043 | ) | 3,535 | ||||||||||||||||||||
| Income tax (expense) benefit |
125 | 1 | 21 | (5 | ) | (1,453 | ) | — | (1,311 | ) | ||||||||||||||||||
| Net income (loss) |
2,134 | 2,262 | 2,076 | 1,002 | 3,793 | (9,043 | ) | 2,224 | ||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock |
— | — | — | — | (90 | ) | — | (90 | ) | |||||||||||||||||||
| Net income (loss) attributable to Comcast Corporation |
$ | 2,134 | $ | 2,262 | $ | 2,076 | $ | 1,002 | $ | 3,703 | $ | (9,043 | ) | $ | 2,134 | |||||||||||||
| Comprehensive income (loss) attributable to Comcast Corporation |
$ | 2,224 | $ | 2,306 | $ | 2,078 | $ | 1,146 | $ | 3,705 | $ | (9,235 | ) | $ | 2,224 | |||||||||||||
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Comcast Corporation
Condensed Consolidating Statement of Income
For the Three Months Ended March 31, 2015
| (in millions) | Comcast Parent |
Comcast Holdings |
CCCL Parent |
NBCUniversal Media Parent |
Non- Guarantor Subsidiaries |
Elimination and Consolidation Adjustments |
Consolidated Comcast Corporation |
|||||||||||||||||||||
| Revenue: |
||||||||||||||||||||||||||||
| Service revenue |
$ | — | $ | — | $ | — | $ | — | $ | 17,853 | $ | — | $ | 17,853 | ||||||||||||||
| Management fee revenue |
244 | — | 237 | — | — | (481 | ) | — | ||||||||||||||||||||
| 244 | — | 237 | — | 17,853 | (481 | ) | 17,853 | |||||||||||||||||||||
| Costs and Expenses: |
||||||||||||||||||||||||||||
| Programming and production |
— | — | — | — | 5,463 | — | 5,463 | |||||||||||||||||||||
| Other operating and administrative |
226 | — | 237 | 237 | 4,855 | (481 | ) | 5,074 | ||||||||||||||||||||
| Advertising, marketing and promotion |
— | — | — | — | 1,360 | — | 1,360 | |||||||||||||||||||||
| Depreciation |
8 | — | — | — | 1,626 | — | 1,634 | |||||||||||||||||||||
| Amortization |
1 | — | — | — | 431 | — | 432 | |||||||||||||||||||||
| 235 | — | 237 | 237 | 13,735 | (481 | ) | 13,963 | |||||||||||||||||||||
| Operating income (loss) |
9 | — | — | (237 | ) | 4,118 | — | 3,890 | ||||||||||||||||||||
| Other Income (Expense): |
||||||||||||||||||||||||||||
| Interest expense |
(410 | ) | (3 | ) | (73 | ) | (120 | ) | (50 | ) | — | (656 | ) | |||||||||||||||
| Investment income (loss), net |
1 | 2 | — | (6 | ) | 36 | — | 33 | ||||||||||||||||||||
| Equity in net income (losses) of investees, net |
2,322 | 2,226 | 1,992 | 1,231 | 885 | (8,623 | ) | 33 | ||||||||||||||||||||
| Other income (expense), net |
(5 | ) | — | — | (11 | ) | 118 | — | 102 | |||||||||||||||||||
| 1,908 | 2,225 | 1,919 | 1,094 | 989 | (8,623 | ) | (488 | ) | ||||||||||||||||||||
| Income (loss) before income taxes |
1,917 | 2,225 | 1,919 | 857 | 5,107 | (8,623 | ) | 3,402 | ||||||||||||||||||||
| Income tax (expense) benefit |
142 | — | 25 | (5 | ) | (1,423 | ) | — | (1,261 | ) | ||||||||||||||||||
| Net income (loss) |
2,059 | 2,225 | 1,944 | 852 | 3,684 | (8,623 | ) | 2,141 | ||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock |
— | — | — | — | (82 | ) | — | (82 | ) | |||||||||||||||||||
| Net income (loss) attributable to Comcast Corporation |
$ | 2,059 | $ | 2,225 | $ | 1,944 | $ | 852 | $ | 3,602 | $ | (8,623 | ) | $ | 2,059 | |||||||||||||
| Comprehensive income (loss) attributable to Comcast Corporation |
$ | 2,017 | $ | 2,209 | $ | 1,942 | $ | 801 | $ | 3,601 | $ | (8,553 | ) | $ | 2,017 | |||||||||||||
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Comcast Corporation
Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 2016
| (in millions) | Comcast Parent |
Comcast Holdings |
CCCL Parent |
NBCUniversal Media Parent |
Non- Guarantor |
Elimination and Consolidation Adjustments |
Consolidated Comcast Corporation |
|||||||||||||||||||||
| Net cash provided by (used in) operating activities |
$ | (490 | ) | $ | — | $ | 78 | $ | (391 | ) | $ | 5,913 | $ | — | $ | 5,110 | ||||||||||||
| Investing Activities |
||||||||||||||||||||||||||||
| Net transactions with affiliates |
(679 | ) | — | (78 | ) | 63 | 694 | — | — | |||||||||||||||||||
| Capital expenditures |
(3 | ) | — | — | — | (1,882 | ) | — | (1,885 | ) | ||||||||||||||||||
| Cash paid for intangible assets |
— | — | — | — | (378 | ) | — | (378 | ) | |||||||||||||||||||
| Acquisitions and construction of real estate properties |
— | — | — | — | (140 | ) | — | (140 | ) | |||||||||||||||||||
| Acquisitions, net of cash acquired |
— | — | — | — | (24 | ) | — | (24 | ) | |||||||||||||||||||
| Proceeds from sales of businesses and investments |
— | — | — | 101 | 9 | — | 110 | |||||||||||||||||||||
| Purchases of investments |
(7 | ) | — | — | — | (441 | ) | — | (448 | ) | ||||||||||||||||||
| Other |
7 | — | — | (5 | ) | 54 | — | 56 | ||||||||||||||||||||
| Net cash provided by (used in) investing activities |
(682 | ) | — | (78 | ) | 159 | (2,108 | ) | — | (2,709 | ) | |||||||||||||||||
| Financing Activities |
||||||||||||||||||||||||||||
| Proceeds from (repayments of) short-term borrowings, net |
(400 | ) | — | — | — | (138 | ) | — | (538 | ) | ||||||||||||||||||
| Proceeds from borrowings |
3,323 | — | — | — | — | — | 3,323 | |||||||||||||||||||||
| Repurchases and repayments of debt |
— | — | — | (4 | ) | (44 | ) | — | (48 | ) | ||||||||||||||||||
| Repurchases and retirements of common stock |
(1,249 | ) | — | — | — | — | — | (1,249 | ) | |||||||||||||||||||
| Dividends paid |
(611 | ) | — | — | — | — | — | (611 | ) | |||||||||||||||||||
| Issuances of common stock |
12 | — | — | — | — | — | 12 | |||||||||||||||||||||
| Distributions to noncontrolling interests and dividends for redeemable subsidiary preferred stock |
— | — | — | — | (77 | ) | — | (77 | ) | |||||||||||||||||||
| Other |
97 | — | — | — | 23 | — | 120 | |||||||||||||||||||||
| Net cash provided by (used in) financing activities |
1,172 | — | — | (4 | ) | (236 | ) | — | 932 | |||||||||||||||||||
| Increase (decrease) in cash and cash equivalents |
— | — | — | (236 | ) | 3,569 | — | 3,333 | ||||||||||||||||||||
| Cash and cash equivalents, beginning of period |
— | — | — | 414 | 1,881 | — | 2,295 | |||||||||||||||||||||
| Cash and cash equivalents, end of period |
$ | — | $ | — | $ | — | $ | 178 | $ | 5,450 | $ | — | $ | 5,628 | ||||||||||||||
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Comcast Corporation
Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 2015
| (in millions) | Comcast Parent |
Comcast Holdings |
CCCL Parent |
NBCUniversal Media Parent |
Non- Guarantor |
Elimination and Consolidation Adjustments |
Consolidated Comcast Corporation |
|||||||||||||||||||||
| Net cash provided by (used in) operating activities |
$ | (294 | ) | $ | (1 | ) | $ | 34 | $ | (361 | ) | $ | 5,867 | $ | — | $ | 5,245 | |||||||||||
| Investing Activities |
||||||||||||||||||||||||||||
| Net transactions with affiliates |
3,609 | 1 | (34 | ) | 321 | (3,897 | ) | — | — | |||||||||||||||||||
| Capital expenditures |
(6 | ) | — | — | — | (1,720 | ) | — | (1,726 | ) | ||||||||||||||||||
| Cash paid for intangible assets |
— | — | — | — | (273 | ) | — | (273 | ) | |||||||||||||||||||
| Acquisitions and construction of real estate properties |
— | — | — | — | (24 | ) | — | (24 | ) | |||||||||||||||||||
| Proceeds from sales of businesses and investments |
— | — | — | — | 180 | — | 180 | |||||||||||||||||||||
| Purchases of investments |
— | — | — | — | (32 | ) | — | (32 | ) | |||||||||||||||||||
| Other |
— | — | — | (5 | ) | 186 | — | 181 | ||||||||||||||||||||
| Net cash provided by (used in) investing activities |
3,603 | 1 | (34 | ) | 316 | (5,580 | ) | — | (1,694 | ) | ||||||||||||||||||
| Financing Activities |
||||||||||||||||||||||||||||
| Proceeds from (repayments of) short-term borrowings, net |
— | — | — | — | (150 | ) | — | (150 | ) | |||||||||||||||||||
| Proceeds from borrowings |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Repurchases and repayments of debt |
(900 | ) | — | — | (1 | ) | (8 | ) | — | (909 | ) | |||||||||||||||||
| Repurchases and retirements of common stock |
(2,000 | ) | — | — | — | — | — | (2,000 | ) | |||||||||||||||||||
| Dividends paid |
(572 | ) | — | — | — | — | — | (572 | ) | |||||||||||||||||||
| Issuances of common stock |
28 | — | — | — | — | — | 28 | |||||||||||||||||||||
| Distributions to noncontrolling interests and dividends for redeemable subsidiary preferred stock |
— | — | — | — | (62 | ) | — | (62 | ) | |||||||||||||||||||
| Other |
135 | — | — | — | 6 | — | 141 | |||||||||||||||||||||
| Net cash provided by (used in) financing activities |
(3,309 | ) | — | — | (1 | ) | (214 | ) | — | (3,524 | ) | |||||||||||||||||
| Increase (decrease) in cash and cash equivalents |
— | — | — | (46 | ) | 73 | — | 27 | ||||||||||||||||||||
| Cash and cash equivalents, beginning of period |
— | — | — | 385 | 3,525 | — | 3,910 | |||||||||||||||||||||
| Cash and cash equivalents, end of period |
$ | — | $ | — | $ | — | $ | 339 | $ | 3,598 | $ | — | $ | 3,937 | ||||||||||||||
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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a global media and technology company with two primary businesses, Comcast Cable and NBCUniversal. We present our operations for Comcast Cable in one reportable business segment, referred to as Cable Communications, and our operations for NBCUniversal in four reportable business segments. The Cable Networks, Broadcast Television, Filmed Entertainment and Theme Parks segments comprise the NBCUniversal businesses (collectively, the “NBCUniversal segments”).
Cable Communications Segment
Comcast Cable is one of the nation’s largest providers of video, high-speed Internet and voice services (“cable services”) to residential customers under the XFINITY brand, and we also provide these and other services to business customers. As of March 31, 2016, our cable systems had 28.0 million total customer relationships; served 22.4 million video customers, 23.8 million high-speed Internet customers and 11.6 million voice customers; and passed more than 55 million homes and businesses. Our Cable Communications segment generates revenue primarily from residential and business customers subscribing to our cable services, which we market individually and as bundled services, and from the sale of advertising. During the three months ended March 31, 2016, our Cable Communications segment generated 65% of our consolidated revenue and 77% of our operating income before depreciation and amortization.
NBCUniversal Segments
NBCUniversal is one of the world’s leading media and entertainment companies that develops, produces and distributes entertainment, news and information, sports, and other content for global audiences, and owns and operates theme parks worldwide.
Cable Networks
Our Cable Networks segment consists primarily of a diversified portfolio of cable television networks. Our cable networks are comprised of our national cable networks, which provide a variety of entertainment, news and information, and sports content, our regional sports and news networks, various international cable networks, our cable television studio production operations, and related digital media properties. Our Cable Networks segment generates revenue primarily from the distribution of our cable network programming to multichannel video providers, from the sale of advertising units on our cable networks and related digital media properties, from the licensing of our owned programming to cable and broadcast networks and subscription video on demand services, and from the sale of our owned programming through digital distributors such as iTunes. Our Cable Networks segment also generates revenue from the production of programming for third-party networks and subscription video on demand services.
Broadcast Television
Our Broadcast Television segment consists primarily of the NBC and Telemundo broadcast networks, our NBC and Telemundo owned local broadcast television stations, the NBC Universo national cable network, our broadcast television studio production operations, and related digital media properties. Our Broadcast Television segment generates revenue primarily from the sale of advertising units on our broadcast networks, owned local television stations and related digital media properties, from the licensing of our owned programming to various distribution platforms, including to cable and broadcast networks as well as to subscription video on demand services, from fees received under retransmission consent agreements, and from the sale of our owned programming on standard-definition video discs and Blu-ray discs (together, “DVDs”) and in digital formats.
Filmed Entertainment
Our Filmed Entertainment segment primarily produces, acquires, markets and distributes filmed entertainment worldwide, and it also develops, produces and licenses live stage plays. Our films are produced primarily under
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the Universal Pictures, Illumination and Focus Features names. Our Filmed Entertainment segment generates revenue primarily from the worldwide theatrical release of our owned and acquired films for exhibition in movie theaters, from the licensing of our owned and acquired films through various distribution platforms, and from the sale of our owned and acquired films on DVDs and in digital formats. Our Filmed Entertainment segment also generates revenue from producing and licensing live stage plays, from distributing filmed entertainment produced by third parties, and from Fandango, our movie ticketing and entertainment business.
Theme Parks
Our Theme Parks segment consists primarily of our Universal theme parks in Orlando, Florida and Hollywood, California. In November 2015, NBCUniversal acquired a 51% interest in the Universal Studios theme park in Osaka, Japan (“Universal Studios Japan”). In addition, along with a consortium of Chinese state-owned companies, we are developing a theme park in China. Our Theme Parks segment generates revenue primarily from ticket sales and guest spending at our theme parks, as well as from licensing and other fees for intellectual property licenses and other services.
Competition
The results of operations of our reportable business segments are affected by competition, as all of our businesses operate in intensely competitive, consumer-driven and rapidly changing environments and compete with a growing number of companies that provide a broad range of communications products and services, and entertainment, news and information content to consumers.
For additional information on the competition our businesses face, see Item 1A: Risk Factors included in our 2015 Annual Report on Form 10-K and refer to the risk factors within that section entitled “Our businesses currently face a wide range of competition, and our businesses and results of operations could be adversely affected if we do not compete effectively” and “Changes in consumer behavior driven by alternative methods for viewing content may adversely affect our businesses and challenge existing business models.”
Seasonality and Cyclicality
Each of our businesses is subject to seasonal and cyclical variations. In our Cable Communications segment, our results are impacted by the seasonal nature of customers receiving our cable services in college and vacation markets. This generally results in a reduction in net customer additions in the second quarter and an increase in net customer additions in the third and fourth quarters of each year.
Revenue in our Cable Communications, Cable Networks and Broadcast Television segments is subject to cyclical advertising patterns and changes in viewership levels. Our U.S. advertising revenue is generally higher in the second and fourth quarters of each year, due in part to increases in consumer advertising in the spring and in the period leading up to and including the holiday season. U.S. advertising revenue is also cyclical, with a benefit in even-numbered years due to advertising related to candidates running for political office and issue-oriented advertising. Revenue in our Cable Networks and Broadcast Television segments fluctuates depending on the timing of when our programming is aired on television, which typically results in higher advertising revenue in the second and fourth quarters of each year. Our revenue and operating costs and expenses, excluding depreciation and amortization (“operating costs and expenses”) are cyclical as a result of our periodic broadcasts of major sporting events such as the Olympic Games, which affect our Cable Networks and Broadcast Television segments, and the Super Bowl, which affect our Broadcast Television segment. Our advertising revenue generally increases in the period of these broadcasts due to increased demand for advertising time, and our operating costs and expenses also increase as a result of our production costs and the amortization of the related rights fees.
Revenue in our Filmed Entertainment segment fluctuates due to the timing of the release of films in movie theaters, on DVD and through digital distribution services. Release dates are determined by several factors, including competition and the timing of vacation and holiday periods. As a result, revenue tends to be seasonal, with increases experienced each year during the summer months and around the holidays. Revenue in our Cable Networks, Broadcast Television and Filmed Entertainment segments also fluctuates due to the timing of when our content is made available to licensees.
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Revenue in our Theme Parks segment fluctuates with changes in theme park attendance that result from the seasonal nature of vacation travel and weather variations, local entertainment offerings and the opening of new attractions. Our theme parks generally experience peak attendance during the summer months when schools are closed and during early winter and spring holiday periods.
Consolidated Operating Results
| Three Months Ended March 31 |
Increase/ (Decrease) |
|||||||||||
| (in millions) | 2016 | 2015 | ||||||||||
| Revenue |
$ | 18,790 | $ | 17,853 | 5.3 | % | ||||||
| Costs and Expenses: |
||||||||||||
| Programming and production |
5,431 | 5,463 | (0.6 | ) | ||||||||
| Other operating and administrative |
5,525 | 5,074 | 8.9 | |||||||||
| Advertising, marketing and promotion |
1,467 | 1,360 | 7.8 | |||||||||
| Depreciation |
1,785 | 1,634 | 9.2 | |||||||||
| Amortization |
493 | 432 | 14.2 | |||||||||
| Operating income |
4,089 | 3,890 | 5.1 | |||||||||
| Other income (expense) items, net |
(554 | ) | (488 | ) | 13.5 | |||||||
| Income before income taxes |
3,535 | 3,402 | 3.9 | |||||||||
| Income tax expense |
(1,311 | ) | (1,261 | ) | 4.0 | |||||||
| Net income |
2,224 | 2,141 | 3.9 | |||||||||
| Net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock |
(90 | ) | (82 | ) | 10.7 | |||||||
| Net income attributable to Comcast Corporation |
$ | 2,134 | $ | 2,059 | 3.6 | % | ||||||
All percentages are calculated based on actual amounts. Minor differences may exist due to rounding.
Consolidated Revenue
Our Cable Communications, Cable Networks and Theme Parks segments accounted for the increase in consolidated revenue for the three months ended March 31, 2016. The increase in our Theme Parks segment was associated with the acquisition of a 51% interest in Universal Studios Japan in November 2015. The increase in consolidated revenue was partially offset by a decrease in revenue in our Broadcast Television and Filmed Entertainment segments. Consolidated revenue for the three months ended March 31, 2015 includes $376 million of revenue associated with our broadcast of the 2015 Super Bowl in February 2015.
Revenue for our segments is discussed separately below under the heading “Segment Operating Results.” Revenue for our other businesses is discussed separately below under the heading “Corporate and Other Results of Operations.”
Consolidated Costs and Expenses
Our Cable Communications, Cable Networks, Filmed Entertainment and Theme Parks segments accounted for substantially all of the increase in consolidated operating costs and expenses for the three months ended March 31, 2016. The increase in our Theme Parks segment was associated with the acquisition of a 51% interest in Universal Studios Japan in November 2015. The increase in consolidated operating costs and expenses was partially offset by lower operating costs and expenses in our Broadcast Television segment, which is primarily due to our broadcast of the 2015 Super Bowl in the prior year period. For the three months ended March 31, 2015, our consolidated operating costs and expenses also include transaction-related costs associated with the Time Warner Cable merger and the divestiture transactions of $99 million.
Operating costs and expenses for our segments is discussed separately below under the heading “Segment Operating Results.” Operating costs and expenses for our corporate and other businesses is discussed separately below under the heading “Corporate and Other Results of Operations.”
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Consolidated Depreciation and Amortization
| Three Months Ended March 31 |
Increase/ (Decrease) |
|||||||||||
| (in millions) | 2016 | 2015 | ||||||||||
| Cable Communications |
$ | 1,843 | $ | 1,680 | 9.7 | % | ||||||
| NBCUniversal |
414 | 364 | 13.6 | |||||||||
| Corporate and Other |
21 | 22 | (4.4 | ) | ||||||||
| Comcast Consolidated |
$ | 2,278 | $ | 2,066 | 10.2 | % | ||||||
Consolidated depreciation and amortization expenses increased for the three months ended March 31, 2016 primarily due to increases in capital expenditures, as well as expenditures for software, in our Cable Communications segment in recent years and the acquisition of a 51% interest in Universal Studios Japan in NBCUniversal’s Theme Parks segment. We continue to invest in customer premise equipment, primarily for our X1 platform, wireless gateways and Cloud DVR technology, and in equipment to increase our network capacity. In addition, because these assets generally have shorter estimated useful lives, our depreciation expenses have increased.
Segment Operating Results
Our segment operating results are presented based on how we assess operating performance and internally report financial information. We use operating income (loss) before depreciation and amortization, excluding impairment charges related to fixed and intangible assets and gains or losses from the sale of assets, if any, as the measure of profit or loss for our operating segments. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of certain of our businesses and from intangible assets recognized in business combinations. Additionally, it is unaffected by our capital structure or investment activities. We use this measure to evaluate our consolidated operating performance and the operating performance of our operating segments and to allocate resources and capital to our operating segments. It is also a significant performance measure in our annual incentive compensation programs. We believe that this measure is useful to investors because it is one of the bases for comparing our operating performance with that of other companies in our industries, although our measure may not be directly comparable to similar measures used by other companies. Because we use operating income (loss) before depreciation and amortization to measure our segment profit or loss, we reconcile it to operating income, the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), in the business segment footnote to our condensed consolidated financial statements (see Note 12 to Comcast’s condensed consolidated financial statements and Note 10 to NBCUniversal’s condensed consolidated financial statements). This measure should not be considered a substitute for operating income (loss), net income (loss) attributable to Comcast Corporation or NBCUniversal, net cash provided by operating activities, or other measures of performance or liquidity we have reported in accordance with GAAP.
We have adjusted prior period segment operating results to reflect certain changes in our management reporting presentation. See Note 12 to Comcast’s condensed consolidated financial statements and Note 10 to NBCUniversal’s condensed consolidated financial statements for additional information on these changes.
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Cable Communications Segment Results of Operations
| Three Months Ended March 31 |
Increase/ (Decrease) |
|||||||||||||||
| (in millions) | 2016 | 2015 | $ | % | ||||||||||||
| Revenue |
||||||||||||||||
| Residential: |
||||||||||||||||
| Video |
$ | 5,538 | $ | 5,331 | $ | 207 | 3.9 | % | ||||||||
| High-speed Internet |
3,275 | 3,044 | 231 | 7.6 | ||||||||||||
| Voice |
896 | 906 | (10 | ) | (1.1 | ) | ||||||||||
| Business services |
1,311 | 1,116 | 195 | 17.5 | ||||||||||||
| Advertising |
559 | 499 | 60 | 12.1 | ||||||||||||
| Other |
625 | 545 | 80 | 14.8 | ||||||||||||
| Total revenue |
12,204 | 11,441 | 763 | 6.7 | ||||||||||||
| Operating costs and expenses |
||||||||||||||||
| Programming |
2,891 | 2,644 | 247 | 9.4 | ||||||||||||
| Technical and product support |
1,530 | 1,440 | 90 | 6.3 | ||||||||||||
| Customer service |
629 | 582 | 47 | 8.0 | ||||||||||||
| Franchise and other regulatory fees |
365 | 334 | 31 | 9.4 | ||||||||||||
| Advertising, marketing and promotion |
837 | 789 | 48 | 6.1 | ||||||||||||
| Other |
1,063 | 994 | 69 | 6.9 | ||||||||||||
| Total operating costs and expenses |
7,315 | 6,783 | 532 | 7.8 | ||||||||||||
| Operating income before depreciation and amortization |
$ | 4,889 | $ | 4,658 | $ | 231 | 5.0 | % | ||||||||
Customer Metrics
| Total Customers | Net Additional Customers | |||||||||||||||
| March 31 | Three Months Ended March 31 |
|||||||||||||||
| (in thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Total customer relationships |
27,970 | 27,234 | 269 | 199 | ||||||||||||
| Single product customers |
8,410 | 8,399 | 45 | (10 | ) | |||||||||||
| Double product customers |
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