Comcast 2008 Annual Report Download - page 71

Note 16: Financial Data by Business Segment
Our reportable segments consist of our Cable and Programming businesses. In evaluating the profitability of our segments, the compo-
nents of net income (loss) below operating income (loss) before depreciation and amortization are not separately evaluated by our
management. Assets are not allocated to segments for management reporting although approximately 95% of our assets relate to the
Cable segment. Our financial data by business segment is presented in the table below.
(in millions) Cable(a)(b) Programming(c)
Corporate and
Other(d)(e) Eliminations(e)(f) Total
2008
Revenue(g) $ 32,443 $ 1,426 $ 644 $ (257) $ 34,256
Operating income (loss) before depreciation and amortization(h) 13,170 362 (399) (1) 13,132
Depreciation and amortization 6,125 199 107 (31) 6,400
Operating income (loss) 7,045 163 (506) 30 6,732
Capital expenditures 5,545 44 161 — 5,750
2007
Revenue(g) $ 29,305 $ 1,314 $ 515 $ (239) $ 30,895
Operating income (loss) before depreciation and amortization(h) 11,922 286 (425) 3 11,786
Depreciation and amortization 5,924 223 100 (39) 6,208
Operating income (loss) 5,998 63 (525) 42 5,578
Capital expenditures 5,993 35 130 — 6,158
2006
Revenue(g) $ 24,042 $ 1,054 $ 412 $ (542) $ 24,966
Operating income (loss) before depreciation and amortization(h) 9,667 239 (318) (146) 9,442
Depreciation and amortization 4,657 167 79 (80) 4,823
Operating income (loss) 5,010 72 (397) (66) 4,619
Capital expenditures 4,244 16 31 104 4,395
(a) For the years ended December 31, 2008, 2007 and 2006, Cable segment revenue was derived from the following services:
2008 2007 2006
Video 58.0% 60.4% 62.6%
High-speed Internet 22.3% 21.9% 20.6%
Phone 8.2% 6.0% 3.8%
Advertising 4.7% 5.2% 6.1%
Franchise fees 2.8% 2.8% 3.0%
Other 4.0% 3.7% 3.9%
Total 100.0% 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.
(b) Our Cable segment includes our regional sports networks.
(c) Our Programming segment consists primarily of our consolidated national programming networks, including E!, Golf Channel, VERSUS, G4 and Style.
(d) Corporate and Other activities include Comcast Interactive Media, Comcast Spectacor, a portion of operating results of our less than wholly owned technology development
ventures (see “(e)” below), corporate activities and all other businesses not presented in our Cable or Programming segments.
(e) We consolidate our less than wholly owned technology development ventures that we control or of which we are considered the primary beneficiary. These ventures are with
various corporate partners, such as Motorola and Gemstar. The ventures have been created to share the costs of development of new technologies for set-top boxes and
other devices. The results of these entities are included within Corporate and Other except for cost allocations, which are made to the Cable segment based on our percentage
ownership in each entity.
(f) Included in the Eliminations column are transactions that our segments enter into with one another. The most common types of transactions are the following:
‰our Programming segment generates revenue by selling cable network programming to our Cable segment, which represents a substantial majority of the revenue elimination
amount
‰our Cable segment receives incentives offered by our Programming segment when negotiating programming contracts that are recorded as a reduction of programming
expenses
‰our Cable segment generates revenue by selling advertising and by selling the use of satellite feeds to our Programming segment
‰our Cable segment generates revenue by providing network services to Comcast Interactive Media
(g) Non-U.S. revenue was not significant in any period. No single customer accounted for a significant amount of our revenue in any period.
(h) To measure the performance of our operating segments, we use operating income before depreciation and amortization, excluding impairments related to fixed and intangible
assets, and gains or losses from the sale of assets, if any. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the
capital-intensive nature of our businesses and from intangible assets recognized in business combinations. It is also unaffected by our capital structure or investment activities.
We use this measure to evaluate our consolidated operating performance, 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 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), net cash provided by operating activities or other
measures of performance or liquidity reported in accordance with GAAP.
69 Comcast 2008 Annual Report on Form 10-K