Comcast 2009 Annual Report Download - page 59

Table of Contents
Comcast 2009 Annual Report on Form 10-K
50
Note 5: Acquisitions and Other Significant Events
2009
NBC Universal Transaction
We entered into agreements with General Electric Company
(“GE”) in December 2009 to form a new company of which
we will own 51% and control, with the remaining 49% to be
owned by GE. Under the terms of the transaction, GE will
contribute NBC Universal’s businesses, including its cable
and broadcast networks, filmed entertainment, televised
entertainment, theme parks and unconsolidated investments,
as well as other GE assets used primarily in NBC Universal’s
business. NBC Universal will borrow $9.1 billion from third
party lenders and distribute the proceeds to GE. We will
contribute our national programming networks, our regional
sports networks and certain of our Internet businesses, as
well as other assets used primarily in those businesses,
collectively valued at approximately $7.25 billion, and make a
cash payment to GE of $7.1 billion less certain adjustments
primarily based on the free cash flow generated by NBC
Universal between December 4, 2009 and the closing. GE
will be entitled to cause the new company to redeem half of
GE’s interest three and a half years after the closing and its
remaining interest seven years after the closing. If GE
exercises its first redemption right, we have the right to
purchase the remainder of GE’s interest. If GE does not
exercise its first redemption right, we have the right to
purchase half of GE’s interest five years after the closing. We
also will have the right to purchase GE’s remaining interest, if
any, eight years after the closing. The redemption and
purchase price will equal the ownership percentage being
acquired multiplied by 120% of the fully distributed public
market trading value of the new company, less half of the
excess of 120% of that value over $28.15 billion. Subject to
various limitations, we are committed to fund up to $2.875
billion in cash or common stock for each of the two
redemptions (for an aggregate of up to $5.75 billion), with
amounts not used in the first redemption to be available for
the second redemption. The transaction is subject to various
regulatory approvals and is expected to close by the end of
2010.
The results of operations for the new company will be
consolidated with our results of operations, as we will control
the new company. When the transaction is completed, the
NBC Universal businesses will be recorded at their fair value
and the businesses we contribute will be recorded at their
historical or carry-over basis. GE’s interest will be recorded
as a redeemable noncontrolling interest in our consolidated
financial statements.
2008
Insight Transaction
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 (the
“Insight transaction”). 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 distribution of the assets of Insight Midwest was
completed without assumption of any of Insight’s debt by us
and we received cable systems serving approximately
696,000 video customers in Illinois and Indiana (the
“Comcast asset pool”). Insight received cable systems
serving approximately 652,000 video customers, together
with approximately $1.24 billion of debt allocated to those
cable systems (the “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 accounted for the distribution of
assets by Insight Midwest as a sale of our 50% interest in the
Insight asset pool in exchange for acquiring an additional
50% interest in the Comcast asset pool. The estimated fair
value of the 50% interest of the Comcast asset pool we
received was approximately $1.2 billion and resulted in a
pretax gain of approximately $235 million, which is included
in other income (expense). We recorded our 50% interest in
the Comcast asset pool as a step acquisition, which was in
accordance with the applicable accounting guidance at that
time.
The results of operations for the cable systems acquired in
the Insight transaction have been reported in our
consolidated financial statements since January 1, 2008 and
are reported in our Cable segment. The weighted-average
amortization period of the franchise-related customer
relationship intangible assets acquired was 4.5 years.
Substantially 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
Insight transaction.
Other
In April 2008, we acquired an additional interest in Comcast
SportsNet Bay Area. In July 2008, we acquired Plaxo, an
address book management and social networking website
service. In August 2008, we acquired the remaining interest
in G4 that we did not already own. In September 2008, we
acquired DailyCandy, an e-mail newsletter and website. The
results of operations for these acquisitions have been
included in our consolidated results of operations since their
respective acquisition dates. The results of operations for
Plaxo and DailyCandy are reported in Corporate and Other.
The aggregate purchase price of these other 2008
acquisitions was approximately $610 million. None of these
acquisitions were material to our consolidated financial
statements for the year ended December 31, 2008.
(in millions)
Property and equipment
$
587
Franchise-related customer relationships
64
Cable franchise rights
1,374
Goodwill
105
Other assets
27
Total liabilities
(31
)
Net assets acquired
$
2,126