Comcast 2010 Annual Report Download - page 43

Table of Contents
37
Comcast 2010 Annual Report on Form 10-
K
NBCUniversal Transaction
On January 28, 2011, we closed our transaction with GE to
form a new company named NBCUniversal, LLC
(“NBCUniversal Holdings”). We now control and own 51% of
NBCUniversal Holdings, and GE owns the remaining 49%.
As part of the NBCUniversal transaction, GE contributed the
historical businesses of NBCUniversal, which is now a wholly
owned subsidiary of NBCUniversal Holdings. The
NBCUniversal contributed businesses include its national
cable programming networks, the NBC network and its
owned NBC affiliated local television stations, the Telemundo
network and its owned Telemundo affiliated local television
stations, Universal Pictures filmed entertainment, the
Universal Studios Hollywood theme park and other related
assets. We contributed our national cable programming
networks, our regional sports and news networks, certain of
our Internet businesses, including DailyCandy and Fandango
and other related assets (“Comcast Content Business”). In
addition to contributing the Comcast Content Business to
NBCUniversal, we made a cash payment of $6.2 billion at the
closing.
As a result of the NBCUniversal transaction, beginning in
2011 we expect to present five reportable segments, Cable
Distribution (currently presented in our Cable segment),
Cable Networks, Broadcast Networks, Filmed Entertainment
and Theme Parks. Our Programming segment, our regional
sports and news networks (currently presented in our Cable
segment) and our contributed Comcast Interactive Media
businesses (currently in Corporate and Other) will be
presented with NBCUniversal’s businesses in the new
segments. The businesses of Comcast Interactive Media that
were not contributed to NBCUniversal will be included in our
Cable Distribution segment.
In connection with the NBCUniversal transaction, we have
incurred incremental expenses related to legal, accounting
and valuation services, which are reflected in operating,
selling, general and administrative expenses. We also
incurred certain financing costs and other shared costs with
GE associated with debt facilities that were entered into in
December 2009 and with the issuance of NBCUniversal’s
senior notes in 2010, which are reflected in other
our customers online; and the continued deployment of 4G
wireless high
-
speed Internet service in certain markets
•
an increase in our total debt outstanding of $2.3 billion to
$31.4 billion, which is primarily due to the issuance of $3.4
billion aggregate principal amount of notes, the proceeds of
which were primarily used to repay debt at its maturity in
2010 and finance the NBCUniversal transaction in 2011
•
the repurchase of approximately 70 million shares of our
Class A Special common stock under our share
repurchase authorization for approximately $1.2 billion
•
the declaration and payment of dividends of $1.1 billion
income (expense) and interest expense. The table below
presents the amounts related to these expenses included in
our consolidated statement of operations.
In connection with the NBCUniversal transaction,
NBCUniversal issued $9.1 billion of senior debt securities
with maturities ranging from 2014 to 2041 and repaid
approximately $1.7 billion of existing debt during 2010.
Immediately prior to the closing, NBCUniversal distributed
approximately $7.4 billion to GE.
Under the terms of the operating agreement of NBCUniversal
Holdings, during the six month period beginning on July 28,
2014 GE has the right to cause NBCUniversal Holdings to
redeem half of GE’s interest in NBCUniversal Holdings, and
during the six month period beginning January 28, 2018, GE
has the right to cause NBCUniversal Holdings to redeem
GE’s remaining interest, if any. If GE exercises its first
redemption right, we have the immediate right to purchase
the remainder of GE’s interest. If GE does not exercise its
first redemption right, during the six month period beginning
on January 28, 2016, we have the right to purchase half of
GE’s interest in NBCUniversal Holdings. During the six month
period beginning January 28, 2019, we have the right to
purchase GE’s remaining interest, if any, in NBCUniversal
Holdings. The purchase price to be paid in connection with
any purchase described in this paragraph will be equal to the
ownership percentage being purchased multiplied by an
amount equal to 120% of the fully distributed public market
trading value of NBCUniversal Holdings (determined
pursuant to an appraisal process if NBCUniversal Holdings is
not then publicly traded), less 50% of an amount (not less
than zero) equal to the excess of 120% of the fully distributed
public market trading value over $28.4 billion. Subject to
various limitations, we are committed to fund up to $2.875
billion in cash or our common stock for each of the two
redemptions (up to an aggregate of $5.75 billion, with
amounts not used in the first redemption to be available for
the second redemption) to the extent NBCUniversal Holdings
cannot fund the redemptions.
Until July 28, 2014, GE may not directly or indirectly transfer
its interest in NBCUniversal Holdings. Thereafter, GE may
transfer its interest to a third party, subject to our right of first
offer. The right of first offer would permit us to purchase all,
but not less than all, of the interests proposed to be
transferred. In the event that GE makes a registration request
in accordance with certain registration rights that are granted
to it under the agreement, we will have the right to purchase,
for cash at the market value (determined pursuant to an
appraisal process if NBCUniversal Holdings is not then
publicly traded), all of GE’s interest in NBCUniversal Holdings
that GE is seeking to register.
Year ended December 31, 2010 (in millions)
Operating, selling, general and administrative
expenses
$
80
Other expense
$
129
Interest expense
$
7