Comcast 2006 Annual Report Download - page 66

Notes to Consolidated Financial Statements Comcast 2006 Annual Report 64
Note 13: Commitments and Contingencies
Commitments
Our programming networks have entered into license agreements
for programs and sporting events that are available for telecast.
In addition, we, through Comcast Spectacor, have employment
agreements with both players and coaches of our professional
sports teams. Certain of these employment agreements, which
provide for payments that are guaranteed regardless of employee
injury or termination, are covered by disability insurance if certain
conditions are met.
Certain of our subsidiaries support debt compliance with respect
to obligations of certain cable television partnerships and invest-
ments in which we hold an ownership interest (see Note 6). The
obligations expire between May 2008 and March 2011. Although
there can be no assurance, we believe that we will not be required
to meet our obligations under such commitments. The total notional
amount of our commitments was $965 million as of December 31,
2006, at which time there were no quoted market prices for similar
agreements.
The following table summarizes our minimum annual commitments
under programming license agreements of our programming net-
works and our minimum annual rental commitments for office
space, equipment and transponder service agreements under
noncancelable operating leases:
Program
License Operating
December 31, 2006 (in millions) Agreements Leases
2007 $ 381 $ 292
2008 343 268
2009 273 223
2010 284 147
2011 285 106
Thereafter 2,338 578
The following table summarizes our rental expense charged to
operations:
Year Ended December 31 (in millions) 2006 2005 2004
Rental expense $ 273 $ 212 $ 184
Contingencies
We and the minority owner group in Comcast Spectacor each
have the right to initiate an exit process under which the fair market
value of Comcast Spectacor would be determined by appraisal.
Following such determination, we would have the option to acquire
the 24.3% interest in Comcast Spectacor owned by the minority
owner group based on the appraised fair market value. In the event
we do not exercise this option, we and the minority owner group
would then be required to use our best efforts to sell Comcast
Spectacor. This exit process includes the minority owner group’s
interest in Comcast SportsNet.
A minority owner of G4 is entitled to trigger an exit process whereby
on May 10, 2009 (the fifth anniversary of the closing date), and on
each successive anniversary of the closing date or the occurrence
of certain other defined events, G4 would be required to purchase
the minority owner’s 15% interest at fair market value (as deter-
mined by an appraisal process). The minority owners in certain of
our technology development ventures also have rights to trigger an
exit process after a certain period of time based on the fair value of
the entities at the time the exit process is triggered.
At Home Cases
Litigation has been filed against us as a result of our alleged con-
duct with respect to our investment in and distribution relationship
with At Home Corporation. At Home was a provider of high-speed
Internet services that filed for bankruptcy protection in Septem-
ber 2001. Filed actions are: (i) class action lawsuits against us,
AT&T (the former controlling shareholder of At Home and also a
former distributor of the At Home service) and others in the United
States District Court for the Southern District of New York, alleging
securities law violations and common law fraud in connection with
disclosures made by At Home in 2001; and (ii) a lawsuit brought
in the United States District Court for the District of Delaware in
the name of At Home by certain At Home bondholders against us,
Brian L. Roberts (our Chairman and Chief Executive Officer and
a director), Cox (Cox is also an investor in At Home and a former
distributor of the At Home service) and others, alleging breaches of
fiduciary duty relating to March 2000 agreements (which, among
other things, revised the distributor relationships), and seeking
recovery of alleged short-swing profits pursuant to Section 16(b)
of the Exchange Act (purported to have arisen in connection with
certain transactions relating to At Home stock effected pursuant to
the March 2000 agreements).
In the Southern District of New York actions (item (i) above), the
court dismissed all claims. The plaintiffs’ appealed this decision,
and the Court of Appeals for the Second Circuit denied the plain-
tiffs’ appeal. The plaintiffs petitioned the Court of Appeals for
rehearing. The Delaware case (item (ii) above) was transferred to
the United States District Court for the Southern District of New
York. The court dismissed the Section 16(b) claims, and the breach
of fiduciary duty claim, for lack of federal jurisdiction. The Court of
Appeals for the Second Circuit denied the plaintiffs’ appeal from
the decision dismissing the Section 16(b) claims, and the U.S.
Supreme Court denied the plaintiffs’ petition for a further appeal.
The plaintiffs recommenced the breach of fiduciary duty claim in
Delaware Chancery Court. The Court has set a trial date in Octo-
ber 2007.