Comcast 2013 Annual Report Download - page 60

Table of Contents
Other
We receive revenue related to cable franchise and other regulatory fees, our digital media center, commissions from electronic
retailing networks, and fees from other services. Cable franchise and regulatory fees represent the fees required to be paid to
federal, state and local authorities that we pass through to our customers. Under the terms of our cable franchise agreements, we
are generally required to pay to the cable franchising authority an amount based on our gross video revenue. The changes in
franchise and other regulatory fees collected from our cable services customers are generally due to changes in the revenue on
which the fees apply.
Other revenue increased 10.5% and 9.0% in 2013 and 2012, respectively, primarily due to increases in franchise and other
regulatory fees and in revenue from other services, including our home security and automation services.
Cable Communications Segment – Operating Costs and Expenses
We continue to focus on controlling the growth of expenses. Our operating margin, which is our operating income before
depreciation and amortization as a percentage of revenue, for 2013, 2012 and 2011 was 41.1%, 41.0% and 41.1%, respectively.
Programming Costs
Programming expenses, our largest operating expense, are the fees we pay to license the programming we distribute to our video
customers. These expenses are affected by the programming license fees charged by cable networks, fees for retransmission of
the signals from local broadcast television stations, the number of video customers we serve and the amount of content we provide.
Programming costs increased in 2013 and 2012 primarily due to increases in programming license fees, including sports
programming and retransmission consent fees, and fees to secure rights for additional programming for our customers across an
increasing number of platforms.
We anticipate that our programming expenses will continue to increase as we provide additional content, including in HD, to our
video customers; as we deliver this content through an increasing number of platforms, including On Demand, online and through
our mobile apps for smartphones and tablets; and as the fees we pay increase, primarily from sports programming costs and
retransmission consent fees. We believe that adding more content and delivering it on various platforms will help us to attract and
retain video customers.
Technical and Product Support Expenses
Technical and product support expenses include costs to complete service call and installation activities, as well as network
operations, product development, fulfillment and provisioning costs. Technical and product support expenses increased in 2013
and 2012 primarily due to expenses related to customer fulfillment activities and expenses related to the development, delivery and
support of our products and services, and continued growth in business services.
Customer Service Expenses
Customer service expenses include the personnel and other costs associated with handling customer sales and service activity.
Customer service expenses increased in 2013 and 2012 primarily due to increases in total labor costs associated with increases in
customer service activity. The increases in customer service activity were primarily due to increases in the number of customers as
well as sales and related support activities associated with the continued deployment of enhanced services and devices, including
our X1 platform and wireless gateways, and continued growth in business services.
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Comcast 2013 Annual Report on Form 10
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K