Comcast 2010 Annual Report Download - page 42

Table of Contents
Comcast 2010 Annual Report on Form 10-K
36
Item 7: Management’s Discussion and
Analysis of Financial Condition and Results
of Operations
Introduction and Overview
We are a leading provider of video, high-speed Internet and
phone services (“cable services”) to residential and business
customers in the United States. On January 28, 2011, we
closed our transaction with General Electric Company (“GE”)
in which we acquired control of the businesses of
NBCUniversal, Inc. (now named NBCUniversal Media, LLC
(“NBCUniversal”)), a leading media and entertainment
company that develops, produces and distributes
entertainment, news, sports and other content to global
audiences. Further details about the transaction are
presented below under the heading “NBCUniversal
Transaction.”
Our Cable segment generates revenue primarily from
subscriptions to our cable services, which we market
individually and in packages. In addition to cable services,
other Cable segment revenue sources include the sale of
advertising and, as of December 31, 2010, the operations of
our regional sports and news networks. As of December 31,
2010, our cable systems served approximately 22.8 million
video customers, 17.0 million high-speed Internet customers
and 8.6 million phone customers and passed more than
51 million homes and businesses in 39 states and the District
of Columbia. In 2010, our Cable segment generated
approximately 94% of our consolidated revenue.
Our video services range from a limited analog service to a
full digital service with access to hundreds of channels,
including premium and pay-per-view channels, On Demand,
music channels, and an interactive, on-screen program
guide. Digital video customers also may subscribe to our
advanced services, which consist of high-definition television
(“HDTV”) and digital video recorder (“DVR”), and access
certain of our programming online based on their level of
video service. Our high-speed Internet services provide
Internet access at downstream speeds of up to 105 Mbps,
depending on the service selected and subject to geographic
market availability. Our phone services provide local and
long-distance calling and other features. We also offer our
cable services to small and medium-sized businesses
(“business services”).
As of December 31, 2010, our Programming segment
consisted primarily of our consolidated national programming
networks, E!, Golf Channel, VERSUS, Style and G4. During
2010, our Programming segment generated consolidated
revenue of $1.7 billion. Revenue from our Programming
segment is generated primarily from monthly per subscriber
license fees paid by multichannel video providers, the sale of
advertising and the licensing of our programming
internationally.
As of December 31, 2010, our other business interests
included Comcast Interactive Media and Comcast Spectacor.
Comcast Interactive Media develops and operates our
Internet businesses, including Comcast.net, Xfinity TV,
Fandango, Plaxo and DailyCandy. Revenue from Comcast
Interactive Media is generated primarily from the sale of
advertising. Comcast Spectacor owns two professional sports
teams, the Philadelphia 76ers and the Philadelphia Flyers,
and a large, multipurpose arena in Philadelphia, the Wells
Fargo Center, and provides facilities management and food
services for sporting events, concerts and other events.
Comcast Interactive Media, Comcast Spectacor and all other
consolidated businesses not included in our Cable or
Programming segments were included in “Corporate and
Other” activities as of December 31, 2010.
We operate our businesses in an intensely competitive
environment. Competition for the cable services we offer
primarily includes direct broadcast satellite (“DBS”) operators
and phone companies. In 2010, our competitors for cable
services continued to add features and adopt aggressive
pricing and packaging for services that are comparable to the
services we offer. A substantial portion of our Cable segment
revenue comes from customers whose spending patterns
may be affected by prevailing economic conditions.
2010 Developments
In addition to the NBCUniversal transaction discussed below,
the following are the more significant developments in our
businesses during 2010:
•
an increase in consolidated revenue of 6.1% to $37.9
billion and an increase in consolidated operating income of
10.6% to $8.0 billion
•
an increase in Cable segment revenue of 5.6% to $35.8
billion and an increase in Cable segment operating income
before depreciation and amortization of 6.4% to $14.6
billion
•
an increase in Programming segment revenue of 11.8% to
$1.7 billion and an increase in Programming segment
operating income before depreciation and amortization of
20.6% to $469 million
• the addition of 1.1 million high-
speed Internet customers
and 988,000 phone customers; and a decrease of 757,000
video customers
•
a reduction in Cable segment capital expenditures of 3.8%
to $4.8 billion
•
the continued investment in our cable distribution system,
including the ongoing transition from analog to digital
transmission of the channels we distribute (“
our all digital
conversion”);
the continued deployment of DOCSIS 3.0
wideband technology; expanding the offering of certain
cable network programming to