Comcast 2009 Annual Report Download - page 61

Table of Contents
Comcast 2009 Annual Report on Form 10-K
52
The net unrealized gains on investments accounted for as
AFS securities as of December 31, 2009 and 2008 were $
34 million and $ 29 million, respectively. The amounts were
reported as a component of accumulated other
comprehensive income (loss), net of related deferred income
taxes of $12 million and $10 million as of December 31, 2009
and 2008, respectively.
Available
-For-Sale Securities
Proceeds from the sale of AFS securities in 2009, 2008 and
2007 were $90 million, $638 million and $1.033 billion,
respectively. Gross realized gains on these sales in 2009,
2008 and 2007 were $13 million, $1 million and $145 million,
respectively. Sales of AFS securities in 2008 and 2007
consisted primarily of the sale of debt securities and sales of
Time Warner Inc. common stock, respectively.
Equity Method
SpectrumCo, LLC
SpectrumCo, LLC (“SpectrumCo”) is a joint venture in which
we, along with TWC and Bright House Networks, are
partners. SpectrumCo was the successful bidder for 137
wireless spectrum licenses for approximately $2.4 billion in
the Federal Communications Commission’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 SpectrumCo
’s
currently planned activities, we have determined that it is not
a VIE. We have and continue to account for this joint venture
as an equity method investment based on its governance
structure, notwithstanding our majority interest.
Clearwire
In November 2008, Sprint Nextel and the legal predecessor
of Clearwire Corporation (“old Clearwire”) closed on a series
of transactions (collectively, the “Clearwire transaction”) with
an investor group made up of us, Intel, Google, TWC and
Bright House Networks. As a result of the Clearwire
transaction, Sprint Nextel and old Clearwire combined their
next-generation wireless broadband businesses and formed
a new independent holding company, Clearwire Corporation,
and its operating subsidiary, Clearwire Communications LLC
(“Clearwire LLC”), that will focus on the deployment of a
nationwide 4G wireless network. We, together
Year ended December 31 (in millions)
2009
2008
Cost
$
46
$
60
Unrealized gains
34
34
Unrealized losses
—
(
5
)
Fair value
$
80
$
89
with the other members of the investor group, initially
invested $3.2 billion in Clearwire LLC. Our portion of the
initial investment was $1.05 billion. As a result of our initial
investment, we received 61.8 million ownership units
(“ownership units”) of Clearwire LLC and 61.8 million shares
of Class B stock (“voting stock”) of Clearwire Corporation, the
publicly traded holding company that controls Clearwire LLC.
The voting stock has voting rights equal to those of the
publicly traded Class A stock of Clearwire Corporation, but
has only minimal economic rights. We hold our economic
rights through the ownership units, which have limited voting
rights. One ownership unit combined with one share of voting
stock are exchangeable into one share of Clearwire
Corporation’s publicly traded Class A stock. Also in
connection with the Clearwire transaction, we entered into an
agreement with Sprint Nextel that allows us to offer wireless
services using certain of Sprint Nextel’s existing wireless
networks and an agreement with Clearwire LLC that allows
us to offer wireless services using Clearwire LLC’s next
generation wireless broadband network. We allocated a
portion of our $1.05 billion investment to the related
agreements.
In 2009, we purchased an aggregate of approximately
25.6 million ownership units and approximately 25.6 million
voting units of Clearwire LLC for approximately $185 million
in connection with Clearwire Corporation’s $1.564 billion
rights offering. Immediately following the rights offering, we
transferred the 25.6 million voting units received to Clearwire
Corporation and received 25.6 million shares of Clearwire
Corporation voting stock. As of December 31, 2009, we held
approximately 9.4% of the ownership interests in Clearwire
Corporation on a fully diluted basis.
In 2008, as a result of the significant decline in the quoted
market value of Clearwire Corporation’s publicly traded
Class A shares from the date of our initial agreement in May
2008 to the quoted market value as of December 31, 2008,
we evaluated our investment to determine if an other
-than-
temporary decline in fair value below our cost basis had
occurred. As a result of the severe decline in the quoted
market value, we recognized an impairment in other income
(expense) of $600 million to adjust our cost basis in our
investment to its estimated fair value as of December 31,
2008. If, in the future, we are required to evaluate our
investment to determine if an other-than-temporary decline in
fair value below our cost basis has occurred, we anticipate
that our evaluation would consider (i) a comparison of actual
operating results and updated forecasts to the projected
discounted cash flows that were used in making our initial
investment decision, (ii) other impairment indicators, such as
changes in competition or technology, and (iii) a comparison
to the value that would be obtained by exchanging our
investment into Clearwire Corporation’s publicly traded
Class A shares. As of December 31, 2009, the fair value of
our investment exceeded our cost basis.