Comcast 2008 Annual Report Download - page 55

The Adelphia and Time Warner transactions added cable systems
in 16 states (California, Colorado, Connecticut, Florida, Georgia,
Louisiana, Maryland, Massachusetts, Minnesota, Mississippi,
Oregon, Pennsylvania, Tennessee, Vermont, Virginia and West
Virginia).
The cable systems we transferred to TWC included our previously
owned cable systems located in Los Angeles, Cleveland and Dal-
las (the “Comcast exchange systems”). The operating results of
the Comcast exchange systems are reported as discontinued
operations and are presented in accordance with SFAS No. 144,
“Accounting for the Impairment or Disposal of Long-Lived Assets,”
(“SFAS No. 144”) (see “Discontinued Operations” below).
Purchase Price Allocation
The results of operations for the cable systems acquired in the
Adelphia and Time Warner transactions have been included in our
consolidated financial statements since July 31, 2006 (the acquis-
ition date). The weighted-average amortization period of the
franchise-related customer relationship intangible assets acquired
was 7 years. As a result of the redemption of our investment in
TWC and the exchange of certain cable systems in 2006, we
reversed deferred tax liabilities of approximately $760 million,
which were primarily related to the excess of tax basis of the
assets acquired over the tax basis of the assets exchanged, and
reduced the amount of goodwill and other noncurrent assets that
would have otherwise been recorded in the acquisition. Sub-
stantially all of the goodwill recorded is expected to be amortizable
for tax purposes.
The table below presents the purchase price allocation to assets
acquired and liabilities assumed as a result of the Adelphia and
Time Warner transactions.
(in millions)
Property and equipment $ 2,640
Franchise-related customer relationships 1,627
Cable franchise rights 6,730
Goodwill 420
Other assets 111
Total liabilities (351)
Net assets acquired $11,177
Discontinued Operations
As discussed above, the operating results of the Comcast
exchange systems transferred to TWC are reported as dis-
continued operations and are presented in accordance with SFAS
No. 144. The table below presents the operating results of the
Comcast exchange systems through the closing date of the
exchanges (July 31, 2006):
Year ended December 31, 2006 (in millions)
Revenue $734
Income before income taxes $121
Income tax expense $ (18)
Net income $103
Other 2006 Acquisitions
E! Entertainment Television
In November 2006, we acquired the 39.5% of E! Entertainment
Television, which operates the E! and Style programming net-
works, that we did not already own for approximately $1.2 billion.
We have historically consolidated the results of operations of E!
Entertainment Television. We allocated the purchase price to
property and equipment, intangibles, and goodwill.
Susquehanna
In April 2006, we acquired the cable systems of Susquehanna
Cable Co. and its subsidiaries (“Susquehanna”) for a total pur-
chase price of approximately $775 million. These cable systems
are located primarily in Pennsylvania, New York, Maine and Mis-
sissippi. Before the acquisition, we held an approximate 30%
equity ownership interest in Susquehanna that we accounted for
as an equity method investment. On May 1, 2006, Susquehanna
Cable Co. redeemed the approximate 70% equity ownership
interest in Susquehanna held by Susquehanna Media Co., which
resulted in Susquehanna becoming 100% owned by us. The
results of operations of these cable systems have been included in
our consolidated financial statements since the acquisition date
and are reported in our Cable segment. We allocated the pur-
chase price to property and equipment, franchise-related
customer relationship intangibles, cable franchise rights, and
goodwill. The acquisition of these cable systems was not material
to our consolidated financial statements for the year ended
December 31, 2006.
53 Comcast 2008 Annual Report on Form 10-K