Comcast 2007 Annual Report Download - page 55

Fair Value Method
We hold unrestricted equity investments in publicly traded com-
panies that we account for as AFS or trading securities. As of
December 31, 2007, $2.049 billion of our fair value method secu-
rities support our obligations under our prepaid forward contracts
that terminate between 2011 and 2015. The net unrealized gains on
investments accounted for as AFS securities as of December 31,
2007 and 2006 were $42 million and $254 million, respectively. The
amounts were reported primarily as a component of accumulated
other comprehensive income (loss), net of related deferred income
taxes of $15 million in 2007 and $89 million in 2006.
The cost, fair value and unrealized gains and losses related to our
AFS securities are presented in the table below. The decreases in
2007 from 2006 are primarily the result of the sale of all the re-
maining shares in Time Warner Inc. held by us during 2007.
Year ended December 31 (in millions) 2007 2006
Cost $ 685 $ 936
Unrealized gains 44 254
Unrealized losses (2) —
Fair value $ 727 $ 1,190
Proceeds from the sales of AFS securities for the years ended
December 31, 2007, 2006 and 2005 were $1.033 billion, $209 million
and $490 million, respectively. Gross realized gains on these sales for
the years ended December 31, 2007, 2006 and 2005 were $145 mil-
lion, $59 million and $18 million, respectively. Sales of AFS securities
for the years ended December 31, 2007, 2006 and 2005 consisted
primarily of sales of Time Warner Inc. common stock.
Equity Method
Our recorded investments as of December 31, 2007 and 2006
exceed our proportionate interests in the book value of the invest-
ees’ net assets by $354 million and $984 million, respectively. The
differences in value are primarily related to our investments in
Insight Midwest, L.P. (“Insight Midwest”) for 2007 and 2006 and
Texas and Kansas City Cable Partners in 2006. A portion of the
basis difference has been attributed to franchise-related customer
relationships of some of the investees. This difference was amor-
tized to equity in net (loss) income of affiliates over a period of four
years and was completed in 2006.
SpectrumCo, LLC
SpectrumCo, LLC (“SpectrumCo”), a consortium of investors includ-
ing us, was the successful bidder for 137 wireless spectrum licenses
for approximately $2.4 billion in the Federal Communications Com-
mission’s advanced wireless spectrum auction that concluded in
September 2006. Our portion of the total cost to purchase the
licenses was approximately $1.3 billion. Based on its currently
planned activities, we have determined that SpectrumCo is not a
VIE. We account for this joint venture as an equity method invest-
ment based on its governance structure, notwithstanding our 57%
majority interest.
Insight Midwest Partnership
In April 2007, we and Insight Communications (“Insight”) agreed to
divide the assets and liabilities of Insight Midwest, a 50%-50%
cable system partnership with Insight. On December 31, 2007, we
contributed approximately $1.3 billion to Insight Midwest for our
share of the partnership’s debt. On January 1, 2008, the dis-
tribution of assets of Insight Midwest without assumption of any of
Insight’s debt was completed and we received cable systems
serving approximately 696,000 video subscribers in Illinois and In-
diana (“Comcast Asset Pool”). Insight received cable systems
serving approximately 652,000 video subscribers, together with
approximately $1.24 billion of debt allocated to those cable sys-
tems (“Insight Asset Pool”). We accounted for our interest in
Insight Midwest as an equity method investment until the Comcast
Asset Pool was distributed to us on January 1, 2008. We expect
to record a gain on this transaction.
Texas and Kansas City Cable Partners
In July 2006, we initiated the dissolution of Texas and Kansas City
Cable Partners, our 50%-50% cable system partnership with TWC.
On January 1, 2007, the distribution of assets by Texas and Kansas
City Cable Partners was completed. We received the cable system
in the Houston Asset Pool, and TWC received the cable systems in
the Kansas City Asset Pool. Prior to the distribution, we accounted
for our investment in Texas and Kansas City Cable Partners under
the equity method.
53 Comcast 2007 Annual Report on Form 10-K