We are a global media and technology company with three primary
businesses: Comcast Cable, NBCUniversal and Sky. We were incorporated
under the laws of Pennsylvania in December 2001. Through our predecessors,
we have developed, managed and operated cable systems since 1963.
Through
transactions in 2011 and 2013, we acquired NBCUniversal, and in the fourth quarter of 2018, we acquired Sky.
This Annual Report on is a combined report being filed separately by Comcast Corporation (“Comcast”) and NBCUniversal Media, LLC (“NBCUniversal”). Comcast owns all of the common equity interests in NBCUniversal, and NBCUniversal meets the conditions set forth in General Instruction. Each of Comcast and NBCUniversal is filing on its own behalf the information contained in this report that relates to itself, and neither company makes any representation as to information relating to the other company.
Dear Fellow Shareholders,
2019 was a terrific year for Comcast, and we enter 2020 with momentum,
enthusiasm, and purpose. We are a unique global media and technology company with a combined 55 million
high-value customer relationships, fantastic premium content, and an innovation engine that is propelling
us forward. Most importantly, we have strong, passionate, and diverse employees who are working together
to shape and deliver what’s next for our industry, consumers, and shareholders.
As we turn toward the
coming decade, we look back at the last one with pride. These past 10 years have been some of the best in
our history. At Cable, in 2010, we introduced our Xfinity brand, pledging to bring customers the finest
product experience anytime, anywhere. We launched X1, creating a cloud-based entertainment platform that
is not only world-class, but also one that has enabled us to accelerate our technological innovation. Today,
we are continuously enhancing this platform with the rapid onset of machine learning to improve and personalize
all aspects of our customers’ experiences. We have invested in broadband, setting a new standard for
connectivity with the creation of xFi. We also launched Xfinity Mobile and Flex, adding to the value of
our core broadband offerings. Through it all, we grew, adding more than one million new broadband customers
each year over the past 14 years. Meanwhile, Comcast Business skyrocketed, beginning the decade as an early-stage
start-up, and ending it generating $8 billion in annual revenue with tremendous runway for future growth.
Collectively, our connectivity businesses generated $26.5 billion in revenue in 2019 (vs. ~$8 billion in 2009).
NBCUniversal has had similar, great success since we acquired it in 2011. We made significant and disciplined
investments. In television, we turned around NBC and Telemundo, achieved record profit levels across our cable
networks, and jumped into 2020 with the debut of our innovative streaming service, Peacock. We brought a new
strategy and creative leadership to the Film team, which resulted in more consistency and higher profitability.
We rapidly increased new attractions and hotels to drive attendance and returns at our spectacular Theme Parks.
Today, NBCUniversal is a recognized global leader in media and entertainment, and its EBITDA has nearly tripled
since we first announced our intent to acquire a majority stake in the company.
In late 2018, we acquired
Europe’s leading premium television business, Sky, enabling us to better compete in a world where scale matters.
Sky is a superb organization with tremendous management, an outstanding brand, 24 million customer relationships
in key markets, and a premier position in sports, news, and entertainment. In its first full year with us, Sky
delivered strong customer additions and impressive viewership across channels. Together, we identified many
ways to unlock value – from Sky’s support for Peacock and Flex, to transferring expertise in broadband, to our
new film and TV studio in Elstree in the U.K. These opportunities will only increase in the years ahead as
we continue to combine our talent and resources to invest smarter and execute faster.
In summary, over the
course of the past decade, we delivered a cumulative total shareholder return of 542% – more than double the S&P 500.
Looking forward, the first growth engine of this company is connectivity; which resulted in
a record year for net customer relationship additions. We will build on our unique speed, coverage, and
control offering – xFi – and also extend that formula to Italy. Second, we will focus on the emerging areas
of streaming and content aggregation by launching Peacock and accelerating the deployment of Flex and Sky Q.
Lastly, we will continue to expand our Parks business, opening Super Nintendo World at Universal Studios Japan
in 2020, and two brand-new parks in Beijing and Orlando, which will open in 2021 and 2023, respectively.
So,
we begin 2020 with a great plan in place and ready to win in a rapidly evolving landscape. We have a galvanized
leadership team, which will forge a path to help us navigate consumer trends with fresh thinking, while building
on our track record of delivering strong operational and financial results and making smart investments. I’d like
to thank those stepping back, including Steve Burke and David Cohen, who have been my partners in creating
our wonderful organization.
The last decade was indeed among the finest in our more than 50 years. Sadly,
it is also when we lost our founder, Ralph J. Roberts. But the special company he envisioned – one where
employees could be inspired and respected, one that would have a meaningful impact on people both through
its products and services as well as its support of local communities, and one that would create long-term
meaningful value for shareholders – is stronger than ever.
I am proud to help lead Comcast into the
future and to build on an extraordinary legacy.
BRIAN L. ROBERTS
CHAIRMAN AND CEO
A global media and technology company with three primary businesses: Comcast Cable, NBCUniversal and Sky.
Consists of the operations of Comcast Cable, which is a leading provider of highspeed internet, video, voice, wireless, and security and automation services to residential customers in the United States under the Xfinity brand. Consists primarily of our national cable networks that provide a variety of entertainment, news and information, and sports content.
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Consists primarily of the NBC and Telemundo broadcast networks, our NBC and Telemundo owned local broadcast television stations, the NBC Universo national cable network, our broadcast television studio production operations, and various digital properties.
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Consists primarily of the operations of Universal Pictures, which produces, acquires, markets and distributes filmed entertainment worldwide; our films are also produced under the Illumination, DreamWorks Animation and Focus Features names.
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Consists primarily of our Universal theme parks in Orlando, Florida; Hollywood, California; and Osaka, Japan
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One of Europe’s leading entertainment companies, which primarily includes a direct-to-consumer business, providing video, high-speed internet, voice and wireless phone services.
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Brian L. Roberts
Chairman and Chief Executive Officer; President
Michael J. Cavanagh
Senior Executive Vice President; Chief Financial Officer
Stephen B. Burke
Senior Executive Vice President; Chairman, NBCUniversal
David L. Cohen
Senior Executive Vice President
David N. Watson
Senior Executive Vice President; President and Chief Executive Officer, Comcast
Thomas J. Reid
Senior Executive Vice President; General Counsel; Secretary
Daniel C. Murdock
Senior Vice President; Chief Accounting Officer and Controller
Revenue is generated from subscribers to our high-speed internet, video, voice, wireless and security and automation services, which we market individually and as bundled services at a discounted rate in the United States.
Revenue from customers that purchase bundled services at a discounted rate is allocated between the separate services based on the respective stand-alone selling prices. The stand-alone selling prices are determined based on the current prices at which we separately sell the services. Significant judgment is used to determine performance obligations that should be accounted for separately and the allocation of revenue when services are combined in a bundle. Revenue related to our security and automation services is reported in other revenue.
We recognize revenue as the services are provided on a monthly basis. Subscription rates and related charges vary according to the services and features customers receive. Customers are typically billed in advance and pay on a monthly basis.
Installation fees are deferred and recognized as revenue over the period of benefit to the customer, which is less than a year for residential customers. While a portion of our customers are subject to contracts for their services, which are typically 1 to 2 years in length, based on our evaluation of the terms of these contracts, we recognize revenue for these services on a basis that is consistent with our customers that are not subject to contracts.
Our services generally involve customer premise equipment, such as set-top boxes, cable modems and wireless gateways. The timing and pattern of recognition for customer premise equipment revenue are consistent with those of our services. We recognize revenue from the sale of wireless handsets at the point of sale. Sales commissions are expensed as incurred, as the related period of benefit is less than a year. Under the terms of cable franchise agreements, we are generally required to pay the cable franchising authority an amount based on gross video revenue. We generally pass these and other similar fees through to our customers and classify these fees in the respective Cable Communications services revenue, with the corresponding costs included in other operating and administrative expenses.
Revenue is generated from subscribers to a variety of our products and services which are offered to businesses.
Our service offerings for small business locations primarily include high-speed internet services, as well as voice and video services, that are similar to those provided to residential customers, as well as cloudbased cybersecurity services, wireless backup connectivity, advanced Wi-Fi solutions, video monitoring services and cloud-based services that provide file sharing, online backup and web conferencing, among other features.
We also offer Ethernet network services that connect multiple locations and provide higher downstream and upstream speed options to medium-sized customers and larger enterprises, as well as advanced voice services, along with video solutions that serve hotels and other large venues. In addition, we provide cellular backhaul services to mobile network operators to help them manage their network bandwidth.
We have expanded our service offerings to include a software-defined networking product for medium-sized and enterprise customers. Larger enterprises may also receive support services related to Wi-Fi networks, router management, network security, business continuity risks and other services.
These service offerings are primarily provided to Fortune 1000 companies and other large enterprises with multiple locations both within and outside of our cable distribution footprint, where we have agreements with other companies to use their networks to provide coverage outside of our service areas.
We recognize revenue as the services are provided on a monthly basis. Substantially all of our customers are initially under contracts, with terms typically ranging from 2 years for small and medium-sized businesses to up to5 years for larger enterprises. At any given time, the amount of future revenue to be earned related to fixed pricing under existing agreements is equal to approximately half of our annual business services revenue, of which the substantial majority will be recognized within 2 years.
Customers with contracts may only discontinue service in accordance with the terms of their contracts. We receive payments based on a billing schedule established in our contracts, which is typically on a monthly basis. Installation revenue and sales commissions are generally deferred and recognized over the respective contract terms.
Revenue is generated from the sale of advertising and technology, tools and solutions relating to advertising businesses.
As part of distribution agreements with cable networks, we generally receive an allocation of scheduled advertising time that we sell to local, regional and national advertisers. In most cases, the available advertising units are sold by our sales force. We also represent the advertising sales efforts of other multichannel video providers in some markets. Since we are acting as the principal in these arrangements, we record the advertising that is sold in advertising revenue and the fees paid to multichannel video providers in other operating and administrative expenses.
In some cases, we work with representation firms as an extension of our sales force to sell a portion of the advertising units allocated to us and record the revenue net of agency commissions. In addition, we generate revenue from the sale of advertising on digital platforms.
We enter into advertising arrangements with customers and have determined that a contract exists once all terms and conditions are agreed upon, typically when the number of advertising units is specifically identified and the timing of airing is scheduled. Advertisements are generally aired or viewed within one year once all terms and conditions are agreed upon. Revenue from these arrangements is recognized in the period in which advertisements are aired or viewed.
Payment terms vary by contract, although terms generally require payment within 30 to 60 days from when advertisements are aired or viewed. In addition, we also provide technology, tools, data-driven services and marketplace solutions to customers in the media industry, which allows advertisers to more effectively engage with their target audiences. Revenue earned in this manner is recognized when services are provided.
Cable Networks generates revenue from the distribution of our cable network programming to traditional and virtual multichannel video providers.
Broadcast Television generates revenue from the fees received under retransmission consent agreements and associated fees received from NBC-affiliated local broadcast television stations. These arrangements are accounted for as licenses of functional intellectual property and revenue is recognized as programming is provided on a monthly basis, generally under multiyear agreements. Monthly fees received under distribution agreements with multichannel video providers are generally based on the number of subscribers. Payment terms and conditions vary by contract type, although terms generally include payment within 60 days.
Cable Networks and Broadcast Television generate revenue from the sale of advertising on our cable and broadcast networks, our owned local broadcast television stations and various digital properties.
We enter into advertising arrangements with customers and have determined that a contract exists once all terms and conditions are agreed upon, typically when the number of advertising units is specifically identified and the timing of airing is scheduled. Advertisements are generally aired or viewed within one year once all terms are agreed upon. Revenue is recognized, net of agency commissions, in the period in which advertisements are aired or viewed and payment occurs thereafter, with payment generally required within 30 days. In some instances, we guarantee audience ratings for the advertisements. To the extent there is a shortfall in contracts where the ratings were guaranteed, a portion of the revenue is deferred until the shortfall is settled, typically by providing additional advertising units generally within one year of the original airing.
Filmed Entertainment generates revenue from the worldwide theatrical release of produced and acquired films for exhibition in movie theaters.
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Theatrical revenue is affected by the timing, nature and number of films released in movie theaters and their acceptance by audiences. It is also affected by the number of exhibition screens, ticket prices, the percentage of ticket sale retention by the exhibitors and the popularity of competing films at the time when films are released. We recognize revenue as the films are viewed and exhibited in theaters and payment generally occurs within 30 days after exhibition.
Cable Networks, Broadcast Television and Filmed Entertainment generate revenue from the licensing of our owned film and television content in the United States and internationally to cable, broadcast and premium networks and subscription video on demand services.
Our agreements generally include fixed pricing and span multiple years. For example, following a film’s theatrical release, Filmed Entertainment may license the exhibition rights of a film to different customers over multiple successive distribution windows.
We recognize revenue when the content is delivered and available for use by the licensee. When the term of an existing agreement is renewed or extended, we recognize revenue at the later of when the content is available or when the renewal or extension period begins.
Payment terms and conditions vary by contract type, although payments are generally collected over the license term.
The amount of future revenue to be earned related to fixed pricing under existing agreements at any given time equals approximately 1 to 2 years of annual Filmed Entertainment content licensing revenue, which is the segment with the largest portion of this future revenue. The majority of this revenue will be recognized within 2 years.
This amount may fluctuate from period to period depending on the timing of the releases and the availability of content under existing agreements and may not represent the total revenue expected to be recognized as it does not include revenue from future agreements or from variable pricing or optional purchases under existing agreements. For our agreements that include variable pricing, such as pricing based on the number of subscribers to a subscription video on demand service sold by our customers, we generally recognize revenue as our customers sell to their subscribers.
Filmed Entertainment generates revenue from the sale of our produced and acquired films on standard-definition digital video discs and Blu-ray discs (together, “DVDs”) and through digital distribution services.
Cable Networks and Broadcast Television also generate revenue from the sale of owned programming on DVDs and through digital distribution services, which is reported in other revenue. We generally recognize revenue from DVD sales, net of estimated returns and customer incentives, on the date that DVDs are delivered to and made available for sale by retailers. Payment terms generally include payment within 60 to 90 days from delivery to the retailer.
Theme Parks generates revenue primarily from guest spending at our Universal theme parks in Orlando, Florida; Hollywood, California; and Osaka, Japan.
Guest spending includes ticket sales and in-park spending on food, beverages and merchandise. We recognize revenue from ticket sales when the tickets are used, generally within a year from the date of purchase. For annual passes, we generally recognize revenue on a straight-line basis over the period the pass is available to be used. We recognize revenue from in-park spending at the point of sale.
Revenue is generated from subscribers to our video services from both residential and business customers.
We also provide high-speed internet, voice and wireless phone services in select countries. Generally, all of our residential customers are initially under contracts, with terms typically ranging from rolling monthly to 2 years, depending on the product and territory, and may only discontinue service in accordance with the terms of their contracts. Subscription rates and related charges vary according to the services and features customers receive and the types of equipment they use. Our video, high-speed internet, voice and wireless phone services generally may be purchased individually or in bundles. We recognize revenue from video, high-speed internet, voice and wireless phone services as the services are provided on a monthly basis. At any given time, the amount of future revenue to be earned related to existing agreements is equal to less than half of our annual direct-to-consumer revenue, which generally will be recognized within 2 years.
Revenue is generated from the distribution of our television channels on third-party platforms and the licensing of owned and acquired programming to third-party video providers.
See the NBCUniversal segment discussion of distribution and content licensing revenue above for accounting policies for these types of arrangements.
Revenue is generated from advertising and sponsorships across our owned television channels and where we represent the sales efforts of third-party channels.
We also sell targeted advertising and generate revenue from online and mobile advertising and advertising across our On Demand services. Revenue is recognized when the advertising is aired or viewed. Since we are acting as the principal in the arrangements where we represent the sales efforts of third parties, we record the advertising that is sold in advertising revenue and the fees paid to the third-party channels in other operating and administrative expenses.