Comcast 2010 Annual Report Download - page 31

Table of Contents
Comcast 2010 Annual Report on Form 10-K
26
legislative enactments, court actions and regulatory
proceedings will continue to clarify, and in some cases
adversely affect, the rights and obligations of cable operators
and other entities under the Communications Act and other
laws.
In addition, local franchising authorities grant us franchises
that permit us to operate our cable systems. We have to
renew or renegotiate these franchises from time to time.
Local franchising authorities often demand concessions or
other commitments as a condition of renewal or transfer, and
these concessions or other commitments could be costly to
us. In addition, we could be disadvantaged if we remain
subject to legal constraints that do not apply equally to our
competitors, such as if phone companies that provide video
services are not subject to the local franchising requirements
and other requirements that apply to us. For example, the
FCC has adopted rules and several states have enacted
legislation to ease the franchising process and reduce
franchising burdens for new entrants. See “Legislation and
Regulation — Cable Services — Video Services —
Franchising” above for additional information.
The television broadcasting and content distribution
industries in the United States also are highly regulated by
federal laws and regulations. For example, NBCUniversal’s
owned local television stations may be adversely affected by
recent proposals to reallocate spectrum for broadband
capability that is currently available for television
broadcasters. As a result of the NBCUniversal transaction,
our businesses are also subject to various other laws and
regulations at the international, federal, state and local levels,
including laws and regulations relating to environmental
protection, which have become more stringent over time, and
the safety of consumer products and theme park operations,
which may have an adverse effect on our businesses and
results of operations.
Failure to comply with the laws and regulations applicable to
our businesses could result in administrative enforcement
actions, fines and civil and criminal liability. In addition,
Congress is constantly considering new legislative
requirements, as are various regulatory agencies such as the
FCC, which could potentially affect our businesses. Any
future legislative, judicial or administrative actions may
increase our costs or impose additional restrictions on our
businesses, which could materially affect our results of
operations. For a more detailed discussion of the risks
associated with the regulation of all of our businesses, see
“Legislation and Regulation” above.
Weak economic conditions may have a negative impact
on our results of operations and financial condition.
Weak economic conditions, including a weak housing market,
persisted during 2010. A substantial portion of our revenue
comes from customers whose spending patterns may be
affected by prevailing economic conditions. To the extent
these weak economic conditions continue, customers may
reduce the advanced or premium services to which they
subscribe, or may
discontinue subscribing to one or more of our cable services.
This risk may be increased by the expanded availability of
free or lower cost competitive services, such as video
streaming over the Internet, or substitute services, such as
wireless phones. The weak economy negatively affected our
net cable services customer additions during 2010.
Moreover, weak economic conditions may have a negative
impact on the advertising revenue of our cable and
programming businesses. Weak economic conditions could
also reduce prices that MVPDs pay for our cable television
programming and has reduced and could continue to reduce
the performance of our theatrical and home entertainment
releases and attendance and spending for our theme parks
business. If these weak economic conditions continue or
deteriorate, our business, results of operations and financial
condition may be adversely affected.
A decline in advertising expenditures or changes in
advertising markets could negatively impact our results
of operations.
Our cable distribution, cable programming and broadcast
businesses derive substantial revenue from the sale of
advertising on a variety of platforms, and a decline in
advertising expenditures could negatively impact our results
of operations. Declines can be caused by the economic
prospects of specific advertisers or industries, by increased
competition for the leisure time of audiences and audience
fragmentation, by the growing use of new technologies, or by
the economy in general, causing advertisers to alter their
spending priorities based on these or other factors. In
addition, advertisers’ willingness to purchase advertising may
be adversely affected by lower audience ratings for our
television programming. Changes in the advertising industry
also could adversely affect the advertising revenue of our
cable programming and broadcast networks. For example,
we rely on Nielsen ratings and Nielsen
’s audience
measurement techniques to measure the popularity of our
content. A change in such measurement techniques or the
introduction of new techniques could negatively impact the
advertising revenue we receive. Further, natural disasters,
wars, acts of terrorism or other significant adverse news
events could lead to a reduction in advertising expenditures
as a result of uninterrupted news coverage and general
economic uncertainty. Reductions in advertising expenditures
could negatively impact our results of operations.
NBCUniversal’s success depends on consumer
acceptance of its content, which is difficult to predict,
and our results of operations may be adversely affected
if our content fails to achieve sufficient consumer
acceptance or our costs to acquire content increase.
Most of NBCUniversal’s businesses create media and
entertainment content, the success of which depends
substantially on consumer tastes and preferences that
change in often unpredictable ways. The success of these
businesses depends on our ability to consistently create,
acquire, market and distribute programming, filmed
entertainment, theme park attractions and