Edgar Filing: COMCAST CORP

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K



(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017
	OR
c	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE TRANSITION PERIOD FROM TO




Commission File Number	Registrant; State of Incorporation; Address and Telephone Number	I.R.S. Employer Identification No.
001-32871	COMCAST CORPORATION PENNSYLVANIA One Comcast Center Philadelphia, PA 19103-2838 (215) 286-1700	27-0000798
001-36438	NBCUniversal Media, LLC DELAWARE 30 Rockefeller Plaza New York, NY 10112-0015 (212) 664-4444	14-1682529



SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Comcast Corporation –
Title of Each Class		Name of Each Exchange on Which Registered
Class A Common Stock, $0.01 par value 2.0% Exchangeable Subordinated Debentures due 2029 5.50% Notes due 2029 9.455% Guaranteed Notes due 2022		NASDAQ Global Select Market New York Stock Exchange New York Stock Exchange New York Stock Exchange
NBCUniversal Media, LLC – NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Comcast Corporation – NONE NBCUniversal Media, LLC – NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.



Comcast Corporation	Yes	x	No	c
NBCUniversal Media, LLC	Yes	x	No	c

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.



Comcast Corporation	Yes	c	No	x
NBCUniversal Media, LLC	Yes	c	No	x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.



Comcast Corporation	Yes	x	No	c
NBCUniversal Media, LLC	Yes	x	No	c

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).



Comcast Corporation	Yes	x	No	c
NBCUniversal Media, LLC	Yes	x	No	c

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K.



	Comcast Corporation			x
	NBCUniversal Media, LLC			N/A

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:



Comcast Corporation	Large accelerated filer	x	Accelerated filer	c	Non-accelerated filer	c	Smaller reporting company	c	Emerging growth company	c
NBCUniversal Media, LLC	Large accelerated filer	c	Accelerated filer	c	Non-accelerated filer	x	Smaller reporting company	c	Emerging growth company	c

If an emerging growth company, indicate by check mark whether the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



	Comcast Corporation			c
	NBCUniversal Media, LLC			c

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).



Comcast Corporation	Yes	c	No	x
NBCUniversal Media, LLC	Yes	c	No	x

As of June 30, 2017, the aggregate market value of the Comcast Corporation common stock held by non-affiliates of the registrant was $181.936 billion.

Indicate the number of shares outstanding of each of the registrant’s classes of stock, as of the latest practicable date:

As of December 31, 2017, there were 4,635,063,642 shares of Comcast Corporation Class A common stock and 9,444,375 shares of Class B common stock outstanding.

Not applicable for NBCUniversal Media, LLC.

NBCUniversal Media, LLC meets the conditions set forth in General Instruction I(1)(a), (b) and (d) of Form 10-K and is therefore filing this form with the reduced disclosure format.

DOCUMENTS INCORPORATED BY REFERENCE

Comcast Corporation – Part III – The registrant’s definitive Proxy Statement for its annual meeting of shareholders presently scheduled to be held in June 2018.

NBCUniversal Media, LLC – NONE

Table of Contents

Comcast Corporation

2017 Annual Report on Form 10-K

Table of Contents



PART I
Item 1	Business	1
Item 1A	Risk Factors	20
Item 1B	Unresolved Staff Comments	26
Item 2	Properties	26
Item 3	Legal Proceedings	27
Item 4	Mine Safety Disclosures	27

PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	28
Item 6	Selected Financial Data	31
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	57
Item 8	Comcast Corporation Financial Statements and Supplementary Data	59
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	102
Item 9A	Controls and Procedures	102
Item 9B	Other Information	103

PART III
Item 10	Directors, Executive Officers and Corporate Governance	104
Item 11	Executive Compensation	105
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	105
Item 13	Certain Relationships and Related Transactions, and Director Independence	105
Item 14	Principal Accountant Fees and Services	105

PART IV
Item 15	Exhibits and Financial Statement Schedules	107
Item 16	Form 10-K Summary	113
Signatures		114
NBCUniversal Media, LLC Financial Statements and Supplementary Data		116

Explanatory Note

This Annual Report on Form 10-K 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 I(1)(a), (b) and (d) of Form 10-K and is therefore filing its information within this Form 10-K with the reduced disclosure format. 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. Where information or an explanation is provided that is substantially the same for each company, such information or explanation has been combined in this report. Where information or an explanation is not substantially the same for each company, separate information and explanation has been provided. In addition, separate consolidated financial statements for each company, along with notes to the consolidated financial statements, are included in this report. Unless indicated otherwise, throughout this Annual Report on Form 10-K, we refer to Comcast and its consolidated subsidiaries, including NBCUniversal and its consolidated subsidiaries, as “we,” “us” and “our;” Comcast Cable Communications, LLC and its subsidiaries as “Comcast Cable;” Comcast Holdings Corporation as “Comcast Holdings;” and NBCUniversal, LLC as “NBCUniversal Holdings.”

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This Annual Report on Form 10-K is for the year ended December 31, 2017. This Annual Report on Form 10-K modifies and supersedes documents filed before it.

The Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with it, which means that we can disclose important information to you by referring you directly to those documents. Information incorporated by reference is considered to be part of this Annual Report on Form 10-K. In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this Annual Report on Form 10-K.

Our registered trademarks include Comcast, NBCUniversal and the Comcast and NBCUniversal logos. This Annual Report on Form 10-K also contains other trademarks, service marks and trade names owned by us, as well as those owned by others.

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Part I

Item 1: Business

We are a global media and technology company with two primary businesses, Comcast Cable and NBCUniversal. 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.

We present our operations for Comcast Cable in one reportable business segment, referred to as Cable Communications, and our operations for NBCUniversal in four reportable business segments: Cable Networks, Broadcast Television, Filmed Entertainment and Theme Parks (collectively, the “NBCUniversal segments”).


•	Cable Communications: Consists of the operations of Comcast Cable, which is one of the nation’s largest providers of video, high-speed Internet, voice, and security and automation services (“cable services”) to residential customers under the Xfinity brand; we also provide these and other services to business customers and sell advertising.


•	Cable Networks: Consists primarily of our national cable networks that provide a variety of entertainment, news and information, and sports content, our regional sports and news networks, our international cable networks, our cable television studio production operations, and various digital properties.


•	Broadcast Television: 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.


•	Filmed Entertainment: 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.


•	Theme Parks: Consists primarily of our Universal theme parks in Orlando, Florida; Hollywood, California; and Osaka, Japan.

Our other business interests consist primarily of Comcast Spectacor, which owns the Philadelphia Flyers and the Wells Fargo Center arena in Philadelphia, Pennsylvania and operates arena management-related businesses, and our wireless phone service, which we launched in mid-2017.

For financial and other information about our reportable business segments, refer to Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations, Note 17 to Comcast’s consolidated financial statements, and Note 15 to NBCUniversal’s consolidated financial statements included in this Annual Report on Form 10-K.

Available Information and Websites

Comcast’s phone number is (215) 286-1700, and its principal executive offices are located at One Comcast Center, Philadelphia, PA 19103-2838. NBCUniversal’s phone number is (212) 664-4444, and its principal executive offices are located at 30 Rockefeller Plaza, New York, NY 10112-0015. Comcast and NBCUniversal’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to such reports filed with or furnished to the SEC under Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are available free of charge on the SEC’s website at www.sec.gov and on Comcast’s website at www.comcastcorporation.com as soon as reasonably practicable after such reports are electronically filed with the SEC. The information posted on our websites is not incorporated into our SEC filings. The public may read and copy any materials filed with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.



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Description of Our Businesses



Cable Communications Segment
Customer Metrics
December 31 (in millions)	2017		2016		2015
Homes and businesses passed^(a)	57.2		56.4		55.7
Video^(b)(c)
Residential customers	21.3		21.5		21.4
Business services customers	1.1		1.0		1.0
Total video customers	22.4		22.5		22.3
Penetration^(d)	39.1	%	39.9	%	40.1	%
High-speed Internet^(c)
Residential customers	23.9		22.8		21.6
Business services customers	2.0		1.9		1.7
Total high-speed Internet customers	25.9		24.7		23.3
Penetration^(d)	45.2	%	43.8	%	41.9	%
Voice
Residential customers	10.3		10.5		10.4
Business services customers	1.2		1.1		1.0
Total voice customers	11.6		11.7		11.5
Penetration^(d)	20.2	%	20.7	%	20.6	%
Security and automation customers	1.1		0.9		0.6
Customer relationships^(e)
Residential customer relationships	27.2		26.5		25.8
Business services customer relationships	2.2		2.0		1.9
Total customer relationships	29.3		28.6		27.7
Residential customer relationships mix^(f)
Single product customers	8.2		7.8		7.6
Double product customers	9.1		8.8		8.5
Triple and quad product customers	9.9		10.0		9.7

Basis of Presentation: Customer metrics include our residential and business customers. All percentages are calculated based on actual amounts. Minor differences may exist due to rounding.


(a)	Homes and businesses are considered passed if we can connect them to our distribution system without further extending the transmission lines. Homes and businesses passed is estimated based on the best available information.

(b)

Generally, a home or business receiving video programming from our distribution system counts as one video customer. For multiple dwelling units (“MDUs”), including buildings located on college campuses, whose residents have the ability to receive additional cable services, such as additional programming choices or our high-definition video (“HD”) or digital video recorder (“DVR”) advanced services, we count and report customers based on the number of potential billable relationships within each MDU. For MDUs whose residents are not able to receive additional cable services, the MDU is counted as a single customer.


(c)	In 2017, we began to offer prepaid services that allow customers to prepay for at least 30 days of service. Residential video and high-speed Internet customers as of December 31, 2017 included prepaid customers totaling approximately 3,000 and 60,000, respectively.


(d)	Penetration is calculated by dividing the number of customers by the number of homes and businesses passed.


(e)	Customer relationships represent the number of residential and business customers that subscribe to at least one of our cable services. Beginning in 2017, we include customers subscribing to our security and automation services in customer relationship information. All periods presented have been adjusted for the inclusion of security and automation customers.


(f)	Single product customers, double product customers, and triple and quad product customers represent residential customers that subscribe to one, two, or three and four primary services, respectively.

Cable Services

We offer our video, high-speed Internet, voice, and security and automation services individually and as bundled services at a discounted rate over our cable distribution system to residential and business customers. Our bundled service offerings aim to meet the needs of the various segments of our customer base, ranging from high-speed Internet services packaged with video or streaming services that include a limited number of channels, to a quad product bundle, consisting of our video, high-speed Internet, voice, and security and automation services. We also offer our wireless phone service as a component of our bundled services,



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which is reported in Corporate and Other. Subscription rates and related charges vary according to the services and features customers receive and the types of equipment they use, and customers are typically billed in advance on a monthly basis. A portion of our residential customers are subject to minimum-term contracts for their cable services, which are typically 2 years in length. Substantially all of our business customers are initially under minimum-term contracts, which typically range from 2 to 5 years. Customers with minimum-term contracts may only discontinue service in accordance with the terms of their contracts.

The Areas We Serve

The map below highlights our cable distribution footprint as of December 31, 2017 and the designated market areas (“DMAs”) where we have 250,000 or more customer relationships. The locations that are bolded represent the DMAs in which we operate that were also included in the top 25 U.S. television DMAs as of December 31, 2017.

Video Services

We offer a broad variety of video services that provide access to hundreds of channels depending on the customer’s level of service. Our levels of service typically range from a limited basic service with access to between 20 and 40 channels to a full service with access to more than 300 channels. Our video services generally include programming provided by national broadcast networks, local broadcast stations, and national and regional cable networks, as well as government and public access programming. We also offer packages that include extensive amounts of foreign-language programming and other specialty tiers of programming with sports, family and international themes. We tailor our video services for particular programming preferences, demographics and geographic areas according to applicable local and federal regulatory requirements.

Our video customers may also subscribe to premium networks. Premium networks include networks such as HBO, Showtime, Starz and Cinemax that generally provide, without commercial interruption, movies, original programming, live and taped sporting events and concerts, and other features.

Our video services generally include access to our video on demand service (“On Demand”) and an interactive, on-screen program guide. Our On Demand service provides video customers with over 160,000 programming choices over the course of a month, including approximately 70,000 in high definition. A substantial portion of our On Demand content is available at no additional charge; other content, primarily movies and special-events programming, such as sporting events and concerts, can be rented or in some cases purchased to own digitally. We continue to increase the number of On Demand choices we offer.

Our HD service provides customers with high-resolution picture quality, improved audio quality and a wide-screen format through an HD set-top box. Our HD service includes a broad selection of HD programming choices, including major broadcast networks, national and regional cable networks, and premium networks. Our DVR service allows video customers to record and store programs



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and play them at whatever time is convenient. Our DVR service also provides the ability to pause and rewind live television. We refer to our HD and DVR services as “advanced services.”

Our Internet Protocol (“IP”) and cloud-enabled video platform, referred to as our X1 platform, provides customers with integrated search functionality, including the use of a voice-activated remote control, personalized recommendations and access to, and integration of content from, certain third-party Internet applications, such as Netflix and YouTube. We also offer our cloud DVR technology in substantially all of our markets. Cloud DVR technology allows our video customers to record programming via their set-top box using cloud-based servers and view those recordings on mobile devices via our mobile apps.

Certain video customers have access to streaming services through our mobile apps and online portal that allow them to view certain live programming and On Demand content and to browse program listings. Depending on the customer’s level of service, these services may require an additional monthly fee. We also launched a streaming video cable service throughout our footprint that allows our high-speed Internet customers to purchase our video cable service and stream live programming to a computer, tablet, smartphone or other device for a monthly fee.

High-Speed Internet Services

We offer high-speed Internet services with downstream speeds that range up to 1 gigabit per second (“Gbps”) and fiber-based speeds that range up to 2 Gbps. These services include access to our online portal and mobile apps, which provide email, an address book, calendars and online security features. Throughout our footprint, we are deploying wireless gateways that combine a customer’s wireless router, cable modem and voice adapter to improve the performance of multiple IP-enabled devices used at the same time within the home, provide faster Internet speeds and create an in-home Wi-Fi network. Additionally, in 2017, we launched an app allowing customers with eligible wireless gateways to personalize and manage their Wi-Fi network remotely, which includes viewing and changing their Wi-Fi password, identifying which devices are connected to their in-home network, setting parental controls and schedules, as well as other features. We are expanding our network of residential, outdoor and business Wi-Fi hotspots to allow most of our high-speed Internet customers to access our high-speed Internet services inside and outside the home. As of December 31, 2017, there were approximately 18.8 million of these hotspots.

Voice Services

We offer voice services using interconnected Voice over Internet Protocol (“VoIP”) technology. Our voice services provide either unlimited or usage-based local and domestic long-distance calling and include options for international calling plans, voicemail, voicemail transcriptions, text messaging, caller ID and call waiting. For customers with our high-speed Internet services, our voice services also include the ability to access and manage voicemail, text messaging and other account features through our online portal or mobile apps.

Business Services

We offer a variety of products and services to businesses. Our high-speed Internet services for business services customers provide downstream speeds that range up to 1 Gbps and fiber-based speeds that range up to 10 Gbps. Our small business services offerings primarily include high-speed Internet services, as well as voice and video services, similar to those that we provide to our residential customers, and also include cloud-based solutions 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. In addition, we provide cellular backhaul services to mobile network operators to help these customers manage their network bandwidth.

Recently, we have expanded our enterprise service offerings to include a software-defined networking product and our managed solutions business to offer enterprise customers support related to Wi-Fi networks, router management, network security, business continuity risks and other services. We primarily offer our enterprise service offerings 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.

Advertising

As part of our distribution agreements with cable networks, we generally receive an allocation of scheduled advertising time on cable networks that we sell through our advertising business to local, regional and national advertisers. In most cases, the available advertising units are sold by our sales force. 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. We also represent the advertising sales efforts of other multichannel video providers in some markets. In addition, we generate revenue from the sale of advertising online and on our On Demand service.

Other

We offer security and automation services that provide home monitoring services and the ability to manage other functions within the home, such as lighting and room temperature, through our online portal or our mobile apps.



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Technology

Our cable distribution system uses a hybrid fiber-optic and coaxial cable network that we believe is sufficiently flexible and scalable to support our future technology requirements. This network provides the two-way transmissions that are essential to providing high-speed Internet services, interactive video services such as On Demand, voice services and security and automation services.

We continue to focus on technology initiatives to design, develop and deploy next-generation media and content delivery platforms, such as our X1 platform and related cloud DVR technology, that use IP technology and our own cloud network servers to deliver video and advanced search capabilities, including through a voice-activated remote control, and that allow access to certain third-party Internet applications.

We continue to deploy wireless gateways to improve the performance of multiple IP-enabled devices used at the same time within the home, provide faster Internet speeds and create an in-home Wi-Fi network. In addition, we continue to expand our network of residential, outdoor and business Wi-Fi hotspots.

We are deploying 1 gigabit high-speed Internet services that leverage DOCSIS 3.1 technology across our footprint and we will continue to expand the capacity of our DOCSIS 3.1 infrastructure, including the implementation of DOCSIS FDX that will enable us to launch multi-gigabit services through our existing network.

Sources of Supply

To offer our video services, we license a substantial portion of our programming from cable networks and broadcast networks, as well as from local broadcast television stations. We attempt to secure long-term programming distribution agreements with these programming providers. The fees associated with these programming distribution agreements are generally based on the number of customers who are able to watch the programming and the platforms on which we provide the content. We seek to include in our distribution agreements the rights to offer such programming through multiple delivery platforms, such as through On Demand, our online portal, our mobile apps and our streaming services.

For our high-speed Internet services, we license software products, such as email and security software, and content, such as news feeds for our online portal, from a variety of suppliers. Under our contracts with these suppliers, we generally pay on a fixed-fee basis, on a per subscriber basis in the case of software product licenses or on a video advertising revenue share basis in the case of content licenses.

For our voice services, we license software products such as voicemail and text messaging from a variety of suppliers under multiyear contracts. The fees we pay are generally based on the consumption of the related services.

We purchase from a limited number of suppliers a significant number of set-top boxes and certain other customer premise equipment, network equipment and services to provide our cable services to residential and business customers.

We use two primary vendors to provide customer billing for our cable services to our residential and business customers.

Customer and Technical Services

Our customer service call centers provide 24/7 call-answering capability, telemarketing and other services. Our technical services group performs various tasks, including installations, plant maintenance and upgrades to our cable distribution system.

Sales and Marketing

We offer our services directly to residential and business customers through our customer service call centers, our retail stores and customer service centers, our websites, door-to-door selling, telemarketing, and third-party outlets, as well as through advertising via direct mail, television and the Internet.

NBCUniversal Segments

Cable Networks

Our Cable Networks segment consists of a diversified portfolio of our national cable networks that provide a variety of entertainment, news and information, and sports content, our regional sports and news networks, our international cable networks, and our cable television studio production operations. We also own various digital properties, which include brand-aligned websites.



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The table below presents a summary of our national cable networks and their advertising reach to U.S. households.



Cable Network	Approximate U.S. Households as of December 31, 2017 (in millions)^(a)	Description of Programming
USA Network	91	General entertainment
E!	89	Entertainment and pop culture
Syfy	89	Imagination-based entertainment
MSNBC	89	News and information
CNBC	87	Business and financial news
Bravo	87	Entertainment, culture and arts
NBC Sports Network	84	Sports
Oxygen	74	Crime, mystery and suspense for women
Golf Channel	73	Golf competition and golf entertainment
Universal Kids	58	Children’s entertainment
CNBC World	34	Global financial news
The Olympic Channel	25	Olympic sports events and Olympic-themed original content

(a)

Household data is based on The Nielsen Company’s January 2018 report, which is derived from information available during the period from November 27, 2017 through December 25, 2017, except for The Olympic Channel, which is derived from information provided by multichannel video providers. The Nielsen report now includes estimates based on subscribers to both traditional and certain virtual multichannel video providers. The Nielsen report is not based on information provided by us and is included solely to permit comparisons between our cable networks and those operated by our peers.

Our regional sports and news networks together serve more than 28 million households across the United States, including in markets such as Baltimore/Washington, Boston, Chicago, Philadelphia, Portland, Sacramento and San Francisco.

We market and distribute our cable network programming in the United States and internationally to multichannel video providers, including both traditional providers of linear programming and virtual providers who provide streaming services for linear programming. We also market and distribute our cable network programming to subscription video on demand services, such as those offered by Amazon, Hulu and Netflix. These distributors may provide our content on television, including via video on demand services, online and through mobile apps.

Our cable networks produce their own programs or acquire the rights to programming from third parties, including sports programming rights that are discussed below under the heading “Broadcast Television.” Our cable television studio production operations identify, develop and produce original content for our cable networks and third parties. We license our owned content, including programming from our cable network production operations, to cable and broadcast networks and subscription video on demand services. We also sell our owned content on standard-definition DVDs and Blu-ray discs (together, “DVDs”) and through digital distribution services such as iTunes.

Broadcast Television

Our Broadcast Television segment operates the NBC and Telemundo broadcast networks, which together serve viewers and advertisers in all 50 states. Our Broadcast Television segment also includes our owned NBC and Telemundo local broadcast television stations, the NBC Universo national cable network, our broadcast television studio production operations, and our various digital properties, which primarily include brand-aligned websites.

NBC Network

The NBC network distributes entertainment, news and sports programming that reaches viewers in virtually all U.S. television households through more than 200 affiliated stations across the United States, including our 11 owned NBC-affiliated local broadcast television stations. The NBC network’s programming library consists of rights of varying nature to more than 100,000 episodes of popular television content, including current and classic titles, unscripted programming, sports, news, long-form and short-form programming, and locally produced programming from around the world.

The NBC network produces its own programs or acquires the rights to programming from third parties. NBCUniversal has various contractual commitments for the licensing of rights to multiyear programming, primarily sports programming. Our most significant sports programming commitments include the U.S. broadcast rights for the summer and winter Olympic Games through 2032 and agreements with the NFL to produce and broadcast a specified number of regular season and playoff games, including Thursday Night Football through the 2017-18 season, Sunday Night Football through the 2022-23 season and two Super Bowl games, the first of which is in 2018. We also have U.S. broadcast rights to a specified number of NHL games through the 2020-21 season,



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English Premier League soccer through the 2021-22 season, certain NASCAR events through 2024 and certain PGA TOUR and other golf events through 2030. NBCUniversal’s sports programming agreements also include the rights to distribute content on our national cable networks, including the NBC Sports Network and Golf Channel, on our regional sports networks, and online, including through our mobile apps.

Our broadcast television studio production operations develop and produce original content, including scripted and unscripted programming series and talk shows. This original content is licensed to broadcast networks, cable networks and local broadcast television stations owned by us and third parties, as well as to subscription video on demand services, and it is sold on DVDs and through digital distribution services both in the United States and internationally. We also produce first-run syndicated shows for local markets that are broadcast on local broadcast television stations in the United States on a market-by-market basis. We currently distribute some of our television programs after their initial broadcast, as well as older television programs from our library, to local broadcast television stations and cable networks in the off-network syndication market.

NBC Local Broadcast Television Stations

As of December 31, 2017, we owned and operated 11 NBC-affiliated local broadcast television stations that collectively reached approximately 32 million U.S. television households, which represent approximately 29% of U.S. television households. In addition to broadcasting the NBC network’s national programming, our local broadcast television stations produce news, sports, public affairs and other programming that addresses local needs and acquire syndicated programming from other sources. The table below presents a summary of the NBC-affiliated local broadcast television stations that we owned and operated as of December 31, 2017.



DMA Served^(a)	Station	General Market Rank^(b)	Percentage of U.S. Television Households^(c)
New York, NY	WNBC	1	6	%
Los Angeles, CA	KNBC	2	5	%
Chicago, IL	WMAQ	3	3	%
Philadelphia, PA	WCAU	4	3	%
Dallas-Fort Worth, TX	KXAS	5	2	%
Washington, D.C.	WRC	6	2	%
San Francisco-Oakland-San Jose, CA	KNTV	8	2	%
Boston, MA	WBTS	10	2	%
Miami-Ft. Lauderdale, FL	WTVJ	16	1	%
San Diego, CA	KNSD	29	1	%
Hartford, CT	WVIT	32	1	%


(a)	DMA served is defined by Nielsen Media Research as a geographic market for the sale of national spot and local advertising time.


(b)	General market rank is based on the relative size of the DMA among the 210 generally recognized DMAs in the United States based on Nielsen estimates for the 2017-18 season.


(c)	Based on Nielsen estimates for the 2017-18 season. The percentage of U.S. television households does not reflect the calculation of national audience reach under the Federal Communications Commission’s (“FCC”) national television ownership cap limits. See “Legislation and Regulation — Broadcast Television — Ownership Limits — National Television Ownership.”

Telemundo

Telemundo is a leading Hispanic media company that produces, acquires and distributes Spanish-language content in the United States and internationally. Telemundo’s operations include the Telemundo network, its 18 owned local broadcast television stations and the NBC Universo national cable network.

The Telemundo network is a leading Spanish-language broadcast network featuring original telenovelas, movies, news, specials and sporting events. Telemundo develops original programming primarily through its production studio and also acquires the rights to programming from third parties. It holds the Spanish-language U.S. broadcast rights to FIFA World Cup soccer through 2026 and the Spanish-language U.S. broadcast rights for certain NFL games that the NBC network will broadcast through the 2022-23 season.



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Telemundo Local Broadcast Television Stations

As of December 31, 2017, Telemundo owned 18 local broadcast television stations, including 17 local broadcast television stations affiliated with the Telemundo network, which collectively reached approximately 60% of U.S. Hispanic television households as of December 31, 2017, and an independent television station in Puerto Rico. The table below presents a summary of these local broadcast television stations.



DMA Served^(a)	Station	Hispanic Market Rank^(b)	Percentage of U.S. Hispanic Television Households^(c)
Los Angeles, CA	KVEA	1	13	%
New York, NY	WNJU	2	9	%
Miami-Ft. Lauderdale, FL	WSCV	3	5	%
Houston, TX	KTMD	4	5	%
Dallas-Fort Worth, TX	KXTX	5	4	%
Chicago, IL	WSNS	6	3	%
San Antonio, TX	KVDA	7	3	%
San Francisco-Oakland-San Jose, CA	KSTS	8	3	%
Phoenix, AZ	KTAZ	9	3	%
Harlingen-Brownsville-McAllen, TX	KTLM	10	2	%
Fresno-Visalia, CA	KNSO^(d)	13	2	%
Philadelphia, PA	WWSI	15	2	%
San Diego, CA	ONSD	17	2	%
Denver, CO	KDEN	19	2	%
Boston, MA	WNEU	21	1	%
Las Vegas, NV	KBLR	24	1	%
Tucson, AZ	KHRR	26	1	%
Puerto Rico	WKAQ	N/A	N/A


(a)	DMA served is defined by Nielsen Media Research as a geographic market for the sale of national spot and local advertising time.


(b)	Hispanic market rank is based on the relative size of the DMA among approximately 15 million U.S. Hispanic households based on Nielsen estimates for the 2017-18 season.


(c)	Based on Nielsen estimates for the 2017-18 season. The percentage of U.S. Hispanic television households does not reflect the calculation of national audience reach under the FCC’s national television ownership cap limits. See “Legislation and Regulation — Broadcast Television — Ownership Limits — National Television Ownership.”


(d)	Operated by a third party that provides certain non-network programming and operations services under a time brokerage agreement.

Filmed Entertainment

Our Filmed Entertainment segment primarily produces, acquires, markets and distributes filmed entertainment worldwide. We also generate revenue from Fandango, our movie ticketing and entertainment business, the sale of consumer products, the production and licensing of live stage plays, and the distribution of filmed entertainment produced by third parties.

We produce films both on our own and jointly with other studios or production companies, as well as with other entities. Our films are produced primarily under the Universal Pictures, Illumination, DreamWorks Animation and Focus Features names. Our films are marketed and distributed worldwide primarily through our own marketing and distribution operations. We also acquire distribution rights to films produced by others, which may be limited to particular geographic regions, specific forms of media or certain periods of time. Our content includes theatrical films, direct-to-video movies and our film library, which is comprised of more than 5,000 movies in a variety of genres.

We have entered into, and may continue to enter into, film cofinancing arrangements with third parties, including both studio and nonstudio entities, to jointly finance or distribute certain of our film productions. These arrangements can take various forms, but in most cases involve the grant of an economic interest in a film to an investor. Investors generally assume the full risks and rewards of ownership proportionate to their ownership in the film.

The majority of our produced and acquired films are initially distributed for exhibition in movie theaters. After their release in movie theaters, we sell and license our films through various methods. We distribute our films globally by selling them on DVDs to retail stores, rental kiosks and subscription by mail services and by selling them through digital distribution services and video on demand services provided by multichannel video providers, including our Cable Communications segment. We also license our films, including selections from our film library, to cable, broadcast and premium networks, to subscription video on demand



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services, and to video on demand and pay-per-view services. The number of films that we license through subscription video on demand services is increasing as consumers continue to seek additional ways to view our content.

Theme Parks

Our Theme Parks segment consists primarily of our Universal theme parks in Orlando, Florida; Hollywood, California; and Osaka, Japan. Universal Orlando includes two theme parks, Universal Studios Florida and Universal’s Islands of Adventure, our water park, Volcano Bay, which opened in May 2017, as well as Universal CityWalk Orlando, a dining, retail and entertainment complex. Universal Orlando also features on-site themed hotels in which we own a noncontrolling interest. Our Universal theme park in Hollywood, California consists primarily of Universal Studios Hollywood, as well as Universal CityWalk Hollywood. Our Universal theme park in Osaka, Japan consists primarily of Universal Studios Japan. We continue to expand our theme parks business internationally, such as through our plans to develop a Universal theme park in Beijing, China along with a consortium of Chinese state-owned companies. In addition, we license the right to use the Universal Studios brand name and other intellectual property, and also provide other services, to third parties that own and operate the Universal Studios Singapore theme park on Sentosa Island, Singapore.

Our Theme Parks segment licenses the right to use a substantial amount of intellectual property from third parties for its themed elements in rides, attractions and merchandising.

Corporate and Other

Our other business interests consist primarily of the operations of Comcast Spectacor, which owns the Philadelphia Flyers and the Wells Fargo Center arena in Philadelphia, Pennsylvania and operates arena management-related businesses.

We are also pursuing other business development initiatives, such as our wireless phone service that we launched in the second quarter of 2017 using our virtual network operator rights to provide the service over Verizon’s wireless network and our existing network of in-home and outdoor Wi-Fi hotspots. We offer the wireless phone service only as part of our bundled service offerings to residential customers that subscribe to our high-speed Internet service within our cable distribution footprint and may in the future also offer wireless phone service to our small business customers on similar terms. The wireless phone service has success-based working capital requirements, primarily associated with the procurement of handsets, which customers are able to pay for upfront or finance interest-free over 24 months, and other equipment.

Competition

All of our businesses operate in intensely competitive, consumer-driven and rapidly changing environments and compete with a growing number of companies that provide a broad range of communications products and services, and entertainment, news and information products and services, to consumers. Technological changes are further intensifying and complicating the competitive landscape and challenging existing business models. In particular, consumers are increasingly turning to online sources for viewing and purchasing content, which has and likely will continue to reduce the number of our video customers and subscribers to our cable networks even as it makes our high-speed Internet services more valuable to consumers. In addition, the increasing number of entertainment choices available has intensified audience fragmentation, which has and likely will continue to adversely affect the audience ratings of our cable networks and broadcast television programming.

Cable Communications Segment

Competition for our cable services consists primarily of direct broadcast satellite (“DBS”) providers, which have a national footprint and compete in all of our service areas, and phone companies with fiber-based networks, which overlap approximately 60% of our service areas and are continuing to expand the areas they serve. Many of these competitors offer features, pricing and packaging for these services, individually and in bundles, comparable to what we offer, and some of these traditional competitors also offer smaller online-only video packages. Many of these competitors also have significant financial resources. AT&T, which owns DIRECTV, announced in 2016 a proposed merger with Time Warner Inc., a media and entertainment company, which competes with our NBCUniversal businesses.

Current and future wireless Internet services, such as 3G, 4G and 5G wireless broadband services and Wi-Fi networks, may compete with our high-speed Internet services, and our voice services are facing increased competition as customers replace wireline phones with wireless phones and Internet-based phone services such as Skype.

There also continue to be new companies, some with significant financial resources, that offer or are seeking to offer services that potentially may compete with some or all of our cable services. For example, companies continue to emerge that provide Internet



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streaming and downloading of video programming, some of which charge no fee or a lower fee than our traditional video packages. Additionally, Google has launched high-speed Internet and video services in a limited number of areas in which we operate.

Video Services

We compete with a number of different sources that provide news, sports, information and entertainment programming to consumers, including:


•	DBS providers, including AT&T’s DIRECTV and DISH Network, that transmit satellite signals to substantially all U.S. households to provide video programming and other information similar to our video services


•	phone companies, including AT&T and Verizon, that have built and continue to build fiber-based networks that provide cable services similar to ours, which overlap a substantial portion of our service areas, and that in some cases offer bundled offerings that include wireless phone services


•	online video distributors including:


◦	virtual multichannel video providers who offer streaming services for linear programming that generally involve smaller packages of programming networks at prices lower than our traditional video service package offerings


◦	subscription video on demand services, such as those offered by Amazon, Hulu and Netflix, that offer online services and devices that enable Internet streaming and downloading of movies, television shows and other video programming


◦	premium, cable and broadcast networks that provide content directly to consumers


•	other providers that build and operate wireline communications systems in the same communities that we serve, including those operating as franchised cable operators


•	satellite master antenna television systems that offer to their subscribers both improved reception of local broadcast television stations and much of the programming offered by our cable systems and generally serve MDUs, office complexes and residential developments


•	other companies, such as local broadcast television stations, that provide multiple channels of free over-the-air programming, as well as video rental services and home entertainment and gaming products

High-Speed Internet Services

We compete with a number of companies offering Internet services, including:


•	wireline phone companies and other providers of wireline Internet service


•	wireless phone companies and other providers of wireless Internet service


•	municipal broadband networks and power companies


•	satellite broadband providers

Phone companies such as AT&T, CenturyLink, Frontier and Verizon have built and are continuing to build fiber-based network infrastructure farther into their networks, which allows them to provide data transmission speeds that exceed those that can be provided with traditional digital subscriber line (“DSL”) technology, and are offering these higher-speed services in many of our service areas. Certain companies that offer DSL service have increased data transmission speeds, lowered prices or created bundled services to compete with our high-speed Internet services.

Google has launched a fiber-to-the-home network that provides high-speed Internet services in a limited number of areas in which we operate, and certain municipalities in our service areas are also building fiber-based networks.

Various wireless companies are offering Internet services using a variety of network types, including 3G and 4G, and in the near future 5G, wireless broadband services and Wi-Fi networks. These networks work with devices such as smartphones, laptops, tablets and mobile wireless routers, as well as wireless data cards. A growing number of commercial venues, such as retail malls, restaurants and airports, also offer Wi-Fi service. Numerous local governments are also considering or actively pursuing publicly subsidized Wi-Fi and other Internet access networks. The availability of these wireless offerings could negatively impact the demand for our high-speed Internet services.

Voice Services

Our voice services compete with wireline and wireless phone companies, including incumbent local exchange carriers (“ILECs”) and competitive local exchange carriers (“CLECs”), and other Internet-based and VoIP service providers. Certain phone companies,



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such as the ILECs AT&T and Verizon, have longstanding customer relationships, and extensive existing facilities and network rights-of-way. A few CLECs also have existing local networks and significant financial resources. In addition, we are increasingly competing with other phone service providers as customers replace traditional wireline phone services with wireless and Internet-based phone services.

Business Services

Our business services primarily compete with a variety of phone companies, including ILECs and CLECs. These companies either operate their own network infrastructure or use all or part of another carrier’s network. We also compete with satellite operators who offer video services to businesses.

NBCUniversal Segments

Cable Networks and Broadcast Television

Our cable networks, broadcast networks and owned local broadcast television stations compete for viewers’ attention and audience share with all forms of programming provided to viewers, including cable, broadcast and premium networks; subscription video on demand services; local broadcast television stations; home entertainment products; pay-per-view and video on demand services; online activities, such as social networking and viewing user-generated content; gaming products; and other forms of entertainment, news and information.

Our cable networks, broadcast networks and owned local broadcast television stations compete for the acquisition of programming and for on-air and creative talent with other cable and broadcast networks, local television stations, and subscription video on demand services. The market for programming is very competitive, particularly for sports programming, where the cost for such programming is significant.

Our cable networks compete with other cable networks and programming providers for carriage of their programming by traditional and virtual multichannel video providers and subscription video on demand services. Our broadcast networks compete with the other broadcast networks in markets across the United States to secure affiliations with independently owned television stations, which are necessary to ensure the effective distribution of broadcast network programming to a nationwide audience.

In addition, our cable television and broadcast television studio production operations compete with other production companies and creators of content for the acquisition of story properties, for creative, performing and technical personnel, and for distribution of, and consumer interest in, their content.

Filmed Entertainment

Our filmed entertainment business competes for audiences for its films and other entertainment content with other major studios and, to a lesser extent, with independent film producers, as well as with alternative forms of entertainment. Our competitive position primarily depends on the number of films we produce, their distribution and marketing success, and consumer response. Our filmed entertainment business also competes to obtain creative, performing and technical talent, including writers, actors, directors and producers, as well as scripts for films. Our filmed entertainment business also competes with the other major studios and other producers of entertainment content for the exhibition of its films in theaters and the distribution of its films on premium networks and on subscription video on demand services.

Theme Parks

Our theme parks business competes with other multi-park entertainment companies. We also compete with other providers of entertainment, lodging, tourism and recreational activities. To help maintain the competitiveness of our theme parks, we have invested and continue to invest in existing and new theme park attractions, hotels and infrastructure.

Advertising

Our cable communications business, cable networks, broadcast networks and owned local broadcast television stations compete for the sale of advertising with other television networks and stations, as well as with all other advertising platforms, such as digital, radio and print media. The willingness of advertisers to purchase advertising from us may be adversely affected by lower audience ratings at our cable networks, broadcast networks and owned local broadcast television stations. Declines in audience ratings also can be caused by increased competition for the leisure time of viewers and by audience fragmentation resulting from the increasing number of entertainment choices available, including content from subscription video on demand services and other online sources. In addition, advertising revenue is adversely affected by the growing use of technologies, such as DVRs and video on demand services, that give consumers greater flexibility to watch programming on a time-delayed or on-demand basis or to fast-forward or skip advertisements within programming.



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Seasonality and Cyclicality

Each of our businesses is subject to seasonal and cyclical variations. See Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations and refer to the “Seasonality and Cyclicality” discussion within that section for additional information.

Legislation and Regulation

The Communications Act of 1934, as amended (the “Communications Act”), and FCC regulations and policies affect significant aspects of our businesses. Our businesses are also subject to other regulation by federal, state, local and foreign authorities and to agreements we enter into with local cable franchising authorities. In addition, we must comply with provisions of the consent decree entered into in connection with the acquisition of NBCUniversal (the “NBCUniversal Consent Decree”) in September 2011, which is scheduled to expire in September 2018. The conditions and commitments pursuant to the FCC Order approving the NBCUniversal transaction (“NBCUniversal Order”) expired in January 2018.

Legislators and regulators at all levels of government frequently consider changing, and sometimes do change, existing statutes, rules or regulations, or interpretations of existing statutes, rules or regulations, or prescribe new ones, any of which may significantly affect our businesses. The FCC and certain states have been active in considering rulemakings and legislation, and they, along with some state attorney generals, have also been active in conducting inquiries and reviews, regarding our services. Any future legislative, judicial, regulatory or administrative actions may increase our costs or impose additional restrictions on our businesses, some of which may be significant. Congress may consider proposals to address communications issues, including whether it should rewrite the entire Communications Act to account for changes in the communications marketplace, whether it should overrule the FCC’s action in 2017 repealing regulation of our broadband Internet access service under Title II of the Communications Act, whether it should enact new, permanent open Internet requirements, and whether it should fund new broadband infrastructure. We are unable to predict the effects of any of these or any other further legislative requirements on our businesses.

The following paragraphs summarize material existing and potential future legal and regulatory requirements affecting our businesses, although reference should be made to the Communications Act, FCC regulations, the NBCUniversal Consent Decree and other legislation and regulations for further information.

Cable Communications Segment

Video Services

Program Carriage

Cable operators and other multichannel video programming distributors (“MVPDs”) are prohibited from requiring as a condition of carriage a financial interest in, or exclusive distribution rights for, a video programming network. In addition, FCC regulations prohibit us from unreasonably restraining the ability of an unaffiliated video programming network to compete fairly by discriminating against the network on the basis of its non-affiliation in the selection, terms or conditions for its carriage. We have been involved in program carriage disputes at the FCC and may be subject to new complaints in the future.

Must-Carry/Retransmission Consent

Cable operators are required to carry, without compensation, programming transmitted by most local commercial and noncommercial broadcast television stations. As an alternative to this “must-carry” requirement, local broadcast television stations may choose to negotiate with the cable operator for “retransmission consent,” under which the station gives up its must-carry rights and instead seeks to negotiate a carriage agreement with the cable operator, which frequently will involve payments to the station. We currently pay certain local broadcast television stations in exchange for their required consent for the retransmission of the stations’ broadcast programming to our video services customers and expect to continue to be subject to demands for increased payments and other concessions from local broadcast television stations. In late 2017, the FCC adopted an order relaxing the broadcast media ownership rules and is considering additional revisions to the rules, which could lead to further broadcast television station consolidation. The FCC also adopted an order authorizing voluntary implementation of a new broadcast technical standard that permits broadcasters to seek carriage of signals using the new standard through retransmission consent. Together, these actions may impact retransmission consent negotiations and the fees we pay broadcasters. For information on must-carry and retransmission consent issues relating to our broadcast television business, see “NBCUniversal Segments - Broadcast Television” below and refer to the “Must-Carry/Retransmission Consent” discussion within that section.



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Pricing and Packaging

The FCC’s rate regulations create a presumption that all local communities are subject to effective competition and should no longer be subject to rate regulation that limits prices cable operators may charge for basic video service, equipment and installation. The FCC has accepted a certification from a Massachusetts franchising authority that demonstrated an absence of effective competition in a number of the communities we serve in Massachusetts, allowing for continued rate regulation in those communities. All of the other areas we serve have unregulated prices. In addition to the FCC’s rate regulation rules, certain state entities monitor and may challenge the marketing and advertising of our services. For example, in 2016, the Washington State Attorney General filed a lawsuit, currently being litigated in state court, alleging that our service protection plan, an optional plan that protects customers from incurring charges for service visits to diagnose and repair installed in-home wiring for residential cable services, violates state consumer protection laws.

Pole Attachments

The FCC regulates the rates, terms and conditions that most pole-owning utility companies charge cable operators and telecommunications carriers for allowing attachments to their poles. States are permitted to preempt FCC jurisdiction and regulate the rates, terms and conditions of attachments themselves, and many states in which we operate have done so. Most of these states have generally followed the FCC’s pole attachment rate standards, which set rates for telecommunications service pole attachments to levels at or near the rates for cable service attachments. Some municipalities have enacted “one-touch” make-ready pole attachment ordinances, which permit third parties to alter components of our network attached to utility poles in ways that could adversely affect our businesses. One of these ordinances in a state that has preempted FCC jurisdiction has been upheld by a federal district court in a challenge brought by another provider, but another ordinance in a state that did not preempt FCC jurisdiction has been vacated by a federal district court in a challenge brought by us as inconsistent with the FCC’s pole attachment rules. In 2017, the FCC initiated a rulemaking that considers amending its pole attachment rules to permit a “one-touch” like make-ready process for the poles within its jurisdiction. If adopted, these rules could have a similar effect as the municipal one-touch make-ready ordinances and adversely affect our businesses.

Franchising

Cable operators generally operate their cable systems under nonexclusive franchises granted by local or state franchising authorities. While the terms and conditions of franchises vary materially from jurisdiction to jurisdiction, franchises typically last for a fixed term, obligate the franchisee to pay franchise fees and meet service quality, customer service and other requirements, and are terminable if the franchisee fails to comply with material provisions. Franchising authorities also may establish reasonable requirements for public, educational and governmental access programming, and some of our franchises require substantial channel capacity and financial support for this programming. The Communications Act also contains provisions governing the franchising process, including renewal procedures designed to protect incumbent franchisees against arbitrary denials of renewal, including unreasonable renewal conditions. We believe that our franchise renewal prospects are generally favorable but cannot guarantee the future renewal of any individual franchise.

Approximately half of the states in which we operate provide for statewide franchising or have simplified local franchising requirements for new entrants. Some allow new entrants to operate on more favorable terms than our current operations, for instance by not requiring that the new entrant provide service to all parts of the franchise area or permitting the new entrant to designate only those portions it wishes to serve. Certain states allow incumbent cable operators such as us to opt in to the new state franchise immediately or later when a competing state franchise has been issued, although even in those states, incumbent cable operators may be required to retain certain franchise obligations that are more burdensome than the new entrant’s state franchise.

High-Speed Internet Services

We provide high-speed Internet services to our customers. Many of these services are subject to a number of regulatory obligations described below. As an Internet service provider (“ISP”), we are also subject to a requirement to implement certain network capabilities to assist law enforcement in conducting surveillance of persons suspected of criminal activity. From time to time, the FCC considers imposing new regulatory obligations on ISPs. New broadband regulations, if adopted, may have adverse effects on our businesses.

Open Internet Regulations

We have committed to be bound by “open Internet” regulations enacted by the FCC in 2010 as a condition of the NBCUniversal Consent Decree until September 2018, even though some of the rules were subsequently overturned on appeal. As a result, we are prohibited from blocking access to lawful Internet content, applications, services or non-harmful devices and unreasonably discriminating in the transmission of lawful Internet traffic. In addition, under the FCC’s 2010 transparency rule that was upheld on appeal, we are required to disclose our network management practices, performance and commercial terms of our Internet services. In addition to the commitments made as part of the NBCUniversal acquisition, we have publicly committed to not block, throttle, or discriminate against lawful Internet traffic and to be transparent with our customers about our Open Internet practices.



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In 2015, the FCC reclassified broadband Internet access service as a “telecommunications service” subject to new open Internet regulations and certain common carrier regulations under Title II of the Communications Act. These included, among other things, prohibiting ISPs from blocking access to lawful content; impairing or degrading lawful Internet traffic on the basis of content, applications or services (“throttling”); prioritizing certain Internet traffic in exchange for consideration (“paid prioritization”); and generally prohibiting ISPs from unreasonably interfering with or unreasonably disadvantaging consumers’ ability to access and use the lawful Internet content, applications, services or devices of their choosing or edge providers’ ability to make lawful content, applications, services or devices available to consumers (“general conduct”).

In December 2017, the FCC adopted an Order eliminating Title II regulation of broadband Internet access service, as well as its prior no-blocking, no-throttling, no paid-prioritization and general conduct rules, stating that jurisdiction to regulate ISP conduct would rest at the FTC. In addition, the Order revised the transparency rule to require ISPs to disclose any blocking and throttling practices, and any paid prioritization practices associated with their broadband offerings; the FCC retained authority to enforce compliance with the transparency rule. Accordingly, after the Order goes into effect, ISP conduct will be subject to review by the FTC; the FTC will be able to enforce the public commitments we have made to not block, throttle or discriminate against lawful Internet traffic; and the FCC will enforce compliance with its new transparency rule. The Order also preempted any state and local laws and regulations that conflict with the FCC’s deregulatory policies. Certain parties have already indicated they intend to appeal the FCC’s Order in federal court. In addition, Congress may consider legislation addressing these regulations and the classification of broadband Internet access services and legislators in numerous states have stated that they will introduce legislation to impose Open Internet protections in a variety of ways. We cannot predict whether or how the rules might be changed, the impact of potential new legislation or the outcome of any litigation.

Broadband Deployment/Infrastructure Initiatives

In 2017, the FCC initiated proceedings intended to remove barriers to deploying next-generation wireless and wireline broadband infrastructure. These proceedings may result in changes to the FCC’s rules related to the deployment of broadband infrastructure, as well as preemption of any state and local laws or regulations that may unreasonably impede the deployment of broadband infrastructure. We cannot predict whether or how any FCC rules might be changed, how state or local laws or regulations may be impacted or how such changes may affect our business.

NBCUniversal Consent Decree

The NBCUniversal Consent Decree includes various conditions requiring us to maintain a broadband Internet access service of at least 12 Mbps downstream across most of our footprint, and to avoid discrimination in how we treat “specialized services” (defined as services we provide over the same last-mile facilities as our broadband Internet access service, but not including our broadband Internet access service, video services or voice services).

Municipally Owned Broadband Networks

A number of local municipalities operate municipally owned broadband networks and there may be further efforts by local governments to expand or create government-owned networks. Certain states have enacted laws that restrict or prohibit local municipalities from operating municipally owned broadband networks, and there may be efforts in other state legislatures to restrict the development of government-owned networks, although some may choose to ease or facilitate such networks. In addition, as part of any federal infrastructure program, governmental subsidies or funding of additional Internet broadband networks may be encouraged. We cannot predict how successful those efforts will be and how they might affect our business.

Voice Services

We provide voice services using VoIP technology. The FCC has adopted a number of regulations for providers of nontraditional voice services such as ours, including regulations relating to privacy of customer proprietary network information, local number portability duties and benefits, disability access, E911, law enforcement assistance, outage reporting, Universal Service Fund contribution obligations, rural call completion, back-up power, service discontinuance and certain regulatory filing requirements. The FCC has not yet ruled on whether VoIP services such as ours should be classified as an “information service” or a “telecommunications service” under the Communications Act. The classification determination is important because telecommunications services are regulated more extensively than information services. State regulatory commissions and legislatures may continue to investigate imposing regulatory requirements on our voice services as long as the regulatory classification of VoIP remains unsettled at the federal level.

Voice Interconnection

Because the FCC has not determined the appropriate classification of our voice services, providers of VoIP services typically either secure CLEC authorization or obtain interconnection to traditional wireline phone company networks by contracting with an existing CLEC, which has the right, as a telecommunications carrier, to request and obtain interconnection with the traditional wireline phone companies. We have arranged for such interconnection rights through affiliated CLECs. If a regulatory or judicial



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authority were to deny our ability to interconnect through one of our affiliated CLECs, our ability to provide voice services and compete in the area in question would be negatively impacted. The FCC regulates the arrangements by which telecommunications carriers compensate one another for exchanged traffic and has affirmed the right of CLECs to collect intercarrier compensation when providing interconnection for VoIP providers.

Wireless Service

In 2017, we began offering a wireless voice and data service. We offer this service using our mobile virtual network operator (“MVNO”) rights to provide the service over Verizon’s wireless network and our existing network of in-home and outdoor Wi-Fi hotspots. MVNOs are subject to many of the same FCC regulations as facilities-based wireless carriers (e.g., E911 services, local number portability, etc.), as well as certain state or local regulations. The FCC or other regulatory authorities may adopt new or different regulations for MVNOs and/or mobile broadband providers in the future, or impose new taxes or fees, which could adversely affect our wireless phone service offering or our business generally.

Universal Service

The federal Universal Service program generally requires us and other phone service providers to pay a fee based on revenue from their interstate and international services into a fund used to subsidize the provision of voice services and broadband-capable voice networks in high-cost areas, the provision of voice services to low-income consumers, and the provision of Internet, voice and telecommunications services to schools, libraries and certain health care providers. Some states also have analogous programs that support service in high-cost areas or to low-income consumers. The FCC has long considered implementing changes to the Universal Service program, such as changing the fee calculation from a revenue-based formula to a per-user fee or per-connection fee, adopting a fee based on bandwidth and expanding the services subject to the fee to include broadband Internet access services. We are unable to predict if or how the FCC may change the Universal Service program, or the effects any such changes would have on our businesses.

The FCC recently has shifted its focus away from supporting traditional telephone service, and toward subsidizing deployment of broadband-capable networks and broadband facilities. This shift could assist some of our competitors. For example, the FCC has revised the high-cost federal Universal Service mechanism to support broadband-capable networks and substantially has revised the program that provides Universal Service support for services to schools and libraries to begin phasing out support for voice services, with greater support directed to broadband services and the deployment of Wi-Fi networks. Similarly, the FCC has expanded its Lifeline subsidy program for low-income consumers to include broadband services in addition to voice services. The FCC or Congress may revisit these subsidy programs and how they are funded. We cannot predict whether or how these programs will be changed in the future.

NBCUniversal Segments

Cable Networks

Program Access

The Communications Act and FCC regulations generally prevent cable networks affiliated with cable operators from favoring cable operators over competing MVPDs.

The FCC and Congress have considered proposals that would require companies that own multiple cable networks to make each of their networks available individually when negotiating distribution agreements with MVPDs and potentially with online video distributors. We currently offer our cable networks both on a bundled basis and, when requested, individually.

Under the terms of the NBCUniversal Consent Decree, we are required to make certain of our cable network, broadcast television and filmed entertainment programming available to bona fide online video distributors in certain circumstances. For further discussion of these conditions, see “Broadcast Television” below and refer to the “Internet Distribution” discussion within that section.

Children’s Programming

Under federal regulations, the amount of commercial content that may be shown on cable networks, broadcast networks and broadcast television stations during programming originally produced and broadcast primarily for an audience of children under 13 years of age is limited, and certain television station programming must serve the educational and informational needs of children under 17 years of age.



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Broadcast Television

Licensing

Local broadcast television stations may be operated only in accordance with a license issued by the FCC upon a finding that the grant of the license will serve the public interest, convenience and necessity. The FCC grants broadcast television station licenses for specific periods of time, which may be renewed with or without conditions. Substantially all of our broadcast television station licenses have pending applications for renewal, although our stations’ authority to operate is automatically extended while a renewal application is under review. Several of these applications have been opposed by third parties. Although our licenses have been renewed in the past, there can be no assurance that we will always obtain renewal grants.

Ownership Limits

FCC regulations limit the ability of individuals and entities to have “attributable interests” above specific ownership levels in local television stations. In November 2017, the FCC adopted an order eliminating certain limitations on ownership of television stations and other specified mass media entities, such as limits on the cross-ownership of broadcast television stations and newspapers in the same market. Elimination of these limits is subject to judicial appeal. In 2018, the FCC is expected to initiate its quadrennial review of its media ownership regulations.

Local Television Ownership

The FCC recently revised its rules to generally permit a licensee to own up to two broadcast stations in the same DMA as long as at least one of the stations is not among the top four-ranked stations in the DMA based on audience share. In addition, the new rules permit a licensee to own up to two stations ranked in the top four in a DMA based on a case-by-case analysis of the circumstances surrounding the proposed combination. These recent changes are subject to judicial appeal. These ownership restrictions do not apply if the signal coverage of the stations involved do not overlap in the same market.

National Television Ownership

The Communications Act and FCC regulations limit the number of broadcast television stations one entity may own or control nationally. No entity may have an attributable interest in broadcast television stations that reach, in the aggregate, more than 39% of all U.S. television households. The FCC also has a rule that affords a 50% discount to UHF stations (channels 14 and above) in calculating the extent of an individual station owner’s holdings under the national cap. The FCC has initiated a proceeding to consider whether to retain the 50% discount and whether to modify the national television ownership limit. Our owned broadcast television station reach does not exceed the current limit even without considering the discount for UHF stations, but elimination of the 50% discount without an increase in the 39% national cap would place us closer to the national cap and limit our flexibility to acquire stations in the future.

Foreign Ownership

The Communications Act generally limits foreign ownership in a broadcast television station to 20% direct ownership and 25% indirect ownership, although the limit on indirect ownership can be waived if the FCC finds it to be in the public interest.

Dual Network Rule

Each of the four major broadcast television networks - ABC, CBS, Fox and NBC - is prohibited from being under common ownership or control with another of the four.

Must Carry/Retransmission Consent

Every three years, each commercial television station must elect for each cable system in its DMA either must carry or retransmission consent. A similar regulatory scheme applies to satellite providers. For the current three-year period, which commenced on January 1, 2018, all of our owned NBC broadcast television stations and our owned Telemundo broadcast television stations elected retransmission consent.

Internet Distribution

The NBCUniversal Consent Decree establishes certain obligations and restraints concerning distribution of our content online. We must make available certain of our cable network, broadcast television and filmed entertainment programming to bona fide online video distributors in certain circumstances, and they may invoke commercial arbitration to resolve disputes over access to such programming. We are one of four owners of Hulu, but we have no voting rights or board representation under the terms of the NBCUniversal Consent Decree. We have entered into license agreements with Hulu on substantially the same terms as its other owners.



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Indecency

A federal statute and FCC regulations prohibit the broadcast of obscene material on television stations at any time and indecent or profane material between the hours of 6 a.m. and 10 p.m. From time to time, we have received and may receive in the future letters of inquiry from the FCC prompted by complaints alleging that certain programming on our owned local broadcast television stations included indecent or profane material.

Filmed Entertainment

Our filmed entertainment business is subject to “trade practice laws” in effect in 25 states and Puerto Rico relating to theatrical distribution of motion pictures. In countries outside the United States, a variety of existing or contemplated laws and regulations may affect our ability to distribute and license motion picture and television products, as well as consumer merchandise products. The ability of countries to deny market access or refuse national treatment to products originating outside their territories is regulated under various international agreements.

Theme Parks

Our theme parks are subject to various regulations, including laws and regulations regarding environmental protection, privacy and data protection, consumer product safety and theme park operations, such as health, sanitation, safety and fire standards, as well as liquor licenses.

Other Areas of Regulation

Intellectual Property

Copyright, trademark, unfair competition, patent, trade secret and other proprietary-rights laws of the United States and other countries help protect our intellectual property rights. In particular, piracy of programming and films through unauthorized distribution of counterfeit DVDs, peer-to-peer file sharing and other platforms presents challenges for our cable networks, broadcast television and filmed entertainment businesses. The unauthorized reproduction, distribution or display of copyrighted material over the Internet or through other methods of distribution, such as through devices, software or websites that allow the reproduction, viewing, sharing and/or downloading of content by either ignoring or interfering with the content’s security features and copyrighted status, interferes with the market for copyrighted works and disrupts our ability to exploit our content. The extent of copyright protection and the use of technological protections, such as encryption, are controversial. Modifications to existing laws that weaken these protections could have an adverse effect on our ability to license and sell our programming.

While many legal protections exist to combat piracy, laws in the United States and internationally continue to evolve, as do technologies used to evade these laws. We have actively engaged in the enforcement of our intellectual property rights and likely will continue to expend substantial resources to protect our content. The repeal of laws intended to combat piracy and protect intellectual property or weakening of such laws or enforcement in the United States or internationally, or a failure of existing laws to adapt to new technologies, could make it more difficult for us to adequately protect our intellectual property rights, which could negatively affect their value and further increase the costs of enforcing our rights.

Copyright laws also require that we contribute a percentage of revenue to a federal copyright royalty pool in exchange for retransmitting copyrighted material in broadcast signals under a compulsory license and that we pay standard industry licensing fees for the public performance of music in the programs we distribute, such as local advertising and local origination programming on our cable systems, as well as in the content we create. The fees we pay to music performance rights organizations are typically renegotiated when we renew licenses with those organizations, while the royalties we contribute to the copyright royalty pool for broadcast signals can be challenged by copyright owners in annual audits, and we cannot predict what those fees will be in the future or if disputes will arise over them. In addition, the Copyright Office has initiated a rulemaking to consider how royalty payments to content owners are calculated under the compulsory license. We cannot predict the outcome of this rulemaking, but there is a risk that it could result in higher royalty payments to content owners. Furthermore, in response to a 2014 FCC decision eliminating the FCC’s “sports blackout” rule, which previously enabled sports teams to insist that cable operators black out sports events not available on local broadcast signals, the leading sports leagues petitioned the Copyright Royalty Board to impose a copyright surcharge on cable operators to compensate sports teams for the loss of programming exclusivity, and that proceeding is now pending.

There has been litigation related to a number of online entities that stream our broadcast television content online without the consent of, or compensation to, NBC or its affiliates. In 2014, the U.S. Supreme Court ruled that one such entity, Aereo, violated broadcasters’ exclusive right to perform their copyrighted works publicly. Subsequently, Aereo sought to operate as a cable system under the Copyright Act. Although the U.S. Copyright Office rejected its application for a compulsory copyright license, other companies have sought legislation or court rulings to obtain a compulsory license to stream broadcast programming online.



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Privacy and Data Security Regulation

The Communications Act generally restricts the nonconsensual collection and disclosure to third parties of cable customers’ personally identifiable information by cable operators, except for rendering service, conducting legitimate business activities related to the service, and responding to legal requests. We are also subject to various state and federal regulations that provide privacy protections for customer proprietary network information related to our voice services.

The FCC’s 2017 decision to reclassify broadband Internet access service as an “information service” has the effect of reinstating the FTC’s authority to regulate ISPs’ privacy protections and their use and disclosure of certain customer information. The FTC generally exercises oversight of consumer privacy protections by using its enforcement authority over unfair and deceptive acts or practices to apply greater restrictions on the collection and use of personally identifiable and other information relating to consumers. One court decision from a panel of judges in the Ninth Circuit has raised questions regarding the extent of FTC jurisdiction over companies like us, whose service offerings include some common carrier services as well as non-common carrier services. However, that panel’s decision is not in effect and has no precedential effect, pending a final decision from the full Ninth Circuit Court of Appeals after a rehearing en banc.

Numerous states and localities, in response to congressional action in 2017 to rescind new ISP privacy rules adopted by the FCC regarding the use and disclosure of certain customer information, have considered legislative or other action that would impose new requirements on our collection, use and disclosure of certain customer information. The FCC’s 2017 Open Internet Order, however, contained broad preemption language that preempts state and local regulations that conflict with federal deregulatory policy, which these state and local efforts may do. We expect these efforts to continue in 2018, although we cannot predict whether such efforts will be successful or preempted, or if successful, how any new requirements may affect our business.

We are also subject to stringent data security and data retention requirements that apply to website operators and online services directed to children under 13 years of age, or that knowingly collect or post personal information from children under 13 years of age. Other privacy-oriented laws have been extended by courts to online video providers and are increasingly being used in privacy lawsuits, including class actions, against providers of video materials online.

We are also subject to state and federal “do not call” laws regarding telemarketing and state and federal laws regarding unsolicited commercial emails, as well as FCC regulations relating to automated telemarketing calls, texts and SMS messages. The FTC and state attorneys general also have initiated efforts to increase and enforce transparency requirements about the collection and use of consumer information, even in an aggregated, non-customer-identifiable form, which may require ongoing review of new and rapidly evolving technologies and methods for delivering content and advertising to ensure that appropriate notice is given to consumers and consent is obtained where required.

We are also subject to state and federal laws and regulations regarding data security that primarily apply to sensitive personal information that could be used to commit identity theft. Most states have security breach notification laws that generally require a business to give notice to consumers and government agencies when certain information has been disclosed to an unauthorized party due to a security breach, and the FCC has adopted security breach rules for voice services. Several states have also enacted general data security requirements to safeguard consumer information, including the proper disposal of consumer information.

The National Institute of Standards and Technology (“NIST”), in cooperation with other federal agencies and owners and operators of U.S. critical infrastructure, including us, have developed a voluntary framework that provides a prioritized, flexible, repeatable, performance-based and cost-effective approach to cybersecurity risk. It is a compendium of existing cross-sector cyber-defense processes, practices and protocols that can help companies identify, assess and manage their cyber risks and vulnerabilities, and several government agencies have encouraged compliance with this framework. NIST recently proposed draft updates to this voluntary framework and is currently reviewing feedback on the draft.

There are pending federal legislative proposals that, if enacted, could create new online consumer privacy protections or impose new requirements on owners and operators of critical infrastructure, including us. We cannot predict whether such legislation will be enacted and, if so, the impact of any such laws on our business.

FCC Spectrum Auction and Repacking

Congress authorized the FCC to conduct an auction to repurpose some broadcast spectrum to mobile broadband use. In this auction, the FCC offered licensees of full-power and Class A television stations the opportunity to sell some or all of their spectrum rights in exchange for cash, and it repackaged those spectrum rights and sold new licenses to wireless providers who can use them for mobile broadband services. In the auction, NBCUniversal sold broadcast spectrum rights associated with television stations in three of its markets, receiving proceeds of approximately $482 million. Those stations, which must vacate their current channels by April 23, 2018, will continue to operate by sharing channels with other NBCUniversal stations in those markets. The FCC assigned 19 of NBCUniversal’s other television stations that did not sell their spectrum rights to new channels; those stations will have to transition to their new channels in a post-auction repacking process that is scheduled to conclude in the third quarter 2020



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and the FCC will reimburse those stations for a portion of their reasonable relocation costs (subject to a nationwide aggregate limit of $1.75 billion). As a result of the repacking process, Comcast will have to make changes to its cable systems to accommodate broadcasters on their newly assigned channels, and will be reimbursed by the FCC for a portion of those related costs (subject to a nationwide aggregate limit of $1.75 billion).

In addition, we acquired 73 new mobile broadband licenses in this auction for $1.7 billion. We will be obligated to meet certain regulatory requirements concerning the use of these licenses over the coming years.

FCC 5G Spectrum Proceedings and Other Wireless Regulations

In three separate regulatory proceedings, the FCC is currently considering establishing and/or modifying its rules to make available large amounts of spectrum that will likely be used to provide the next generation of commercial wireless broadband services, both fixed and mobile, commonly referred to as 5G services. Some of this spectrum is currently used for satellite delivery of cable programming to cable headends, including our own, and there is a risk that such satellite delivery could be disrupted if the FCC were to adopt some of the proposals raised in these proceedings. There is also a risk that the FCC could adopt proposals that favor certain business models over others in the 5G marketplace, thereby limiting potential business opportunities for us in the future. In addition, there is potential for new legislation or FCC regulations that could enable wireless providers to offer video and other services over their networks subject to different, and possibly fewer, regulatory obligations than the services we provide. We cannot predict what rules or legislation, if any, will ultimately be adopted or how any such changes would affect our businesses.

State and Local Taxes

Some states and localities have imposed or are considering imposing, through both legislative and administrative channels, new or additional taxes or fees on, or limiting or eliminating incentives or credits earned or monetized by, the businesses operated by our Cable Communications and NBCUniversal segments, or imposing adverse methodologies by which taxes, fees, incentives or credits are computed, earned or monetized. These include combined reporting or other changes to general business taxes, central assessments for property tax and taxes and fees on the businesses operated or services provided by our Cable Communications and NBCUniversal segments. In some situations, DBS providers and other competitors that deliver their services over a high-speed Internet connection do not face the same state tax and fee burdens. Congress has also considered, and may consider again, proposals to bar or limit states from imposing taxes on these DBS providers or other competitors that are equivalent to the taxes or fees that we pay. The Internet Tax Freedom Act, which prohibits most states and localities from imposing sales and other taxes on our Internet access charges, was made permanent by 2016 legislation; however, some jurisdictions have or may assert that certain taxes akin to right-of-way fees are not preempted by Internet Tax Freedom Act.

Environmental Matters

Certain of our business operations are subject to environmental laws and regulations since they involve air emissions, wastewater discharges and the use, disposal and cleanup of toxic and hazardous substances. Any failure to comply with environmental requirements could result in monetary fines, civil or criminal sanctions, third-party claims or other costs or liabilities. Environmental requirements have become more stringent over time, and pending or proposed new regulations could impact our operations or costs.

Other Regulations

Federal regulators actively regulate other aspects of our businesses, including accessibility to our video and voice services and broadcast television programming for people with disabilities, customer service standards, inside wiring, cable equipment, leased access, loudness of commercial advertisements, advertising, Emergency Alert System, equal employment opportunity, lottery programming, recordkeeping and public file access requirements, regulatory fees and technical standards relating to the operation of cable systems and television stations. We are occasionally subject to enforcement actions at the FCC, which can result in us having to pay fines to the agency or being subject to other sanctions. We also are subject to various international regulations, including those that cover television broadcasting, programming and advertising.

Employees

As of December 31, 2017, we had approximately 164,000 full-time and part-time employees calculated on a full-time equivalent basis. Of these employees, approximately 91,000 and 62,000 were associated with our cable communications business and our NBCUniversal businesses, respectively. We also use freelance and temporary employees in the normal course of our business.



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Caution Concerning Forward-Looking Statements

The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. In this Annual Report on Form 10-K, we state our beliefs of future events and of our future financial performance. In some cases, you can identify these so-called “forward-looking statements” by words such as “may,” “will,” “should,” “expects,” “believes,” “estimates,” “potential,” or “continue,” or the negative of these words, and other comparable words. You should be aware that these statements are only our predictions. In evaluating these statements, you should consider various factors, including the risks and uncertainties listed in “Risk Factors” and in other reports we file with the SEC.

Additionally, we operate in a highly competitive, consumer-driven and rapidly changing environment. This environment is affected by government regulation; economic, strategic, political and social conditions; consumer response to new and existing products and services; technological developments; and, particularly in view of new technologies, the ability to develop and protect intellectual property rights. Our actual results could differ materially from our forward-looking statements as a result of any of such factors, which could adversely affect our businesses, results of operations or financial condition. We undertake no obligation to update any forward-looking statements.

Item 1A: Risk Factors

Our businesses currently face a wide range of competition, and our businesses and results of operations could be adversely affected if we do not compete effectively.

Competition for our cable services consists primarily of DBS providers and phone companies with fiber-based networks that typically offer features, pricing and packaging for services comparable to ours. Some of these competitors are also offering smaller packages of channels at price points lower than our standard packages, both through traditional and online distribution platforms, which could cause us to offer more customized programming packages that may be less profitable. AT&T, our largest phone company competitor, acquired DirecTV, the nation’s largest DBS provider, in 2015 to create an even larger competitor, and in 2016, announced a proposed merger with Time Warner, a media and entertainment company. If consolidation between phone companies (which are also wireless distributors) and content providers occurs, some of our competitors may offer free or lower cost streaming services for viewing their content through unlimited data-usage plans for their Internet or wireless phone services. Additional companies, some with significant financial resources, continue to enter or are seeking to enter the video distribution market, primarily by offering Internet streaming and downloading of video programming.

Wireless Internet services, such as 3G and 4G, and in the near future 5G, wireless broadband services and Wi-Fi networks, and devices such as smartphones, tablets, wireless data cards, and mobile wireless routers that connect to such devices, may compete with our high-speed Internet services. Our wireline voice services are facing increased competition as customers replace wireline phones with wireless and Internet-based phone services.

Our cable communications business continues to seek ways to enhance the value of our cable services network, such as by growing our high-speed Internet services and business services and by launching additional services, such as our security and automation services. There can be no assurance that we can execute on these and other initiatives in a manner sufficient to grow or maintain our Cable Communications segment revenue, maintain our Cable Communications segment operating margin or to compete successfully in the future.

Each of NBCUniversal’s businesses also faces substantial and increasing competition from providers of similar types of content, as well as from other forms of entertainment and recreational activities. NBCUniversal must compete to obtain talent, content and other resources required in operating these businesses.

The ability of all of our businesses to compete effectively depends on our perceived image and reputation among our various constituencies, including our customers, consumers, advertisers, investors and government authorities. Our ability to compete may be negatively affected if we do not provide our customers with a satisfactory customer experience.

There can be no assurance that we will be able to compete effectively against existing or newer competitors or that competition will not have an adverse effect on our businesses. For a more detailed description of the competition facing our businesses, see Item 1: Business and refer to the “Competition” discussion within that section.



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Changes in consumer behavior driven by online distribution platforms for viewing content could adversely affect our businesses and challenge existing business models.

Distribution platforms for viewing and purchasing content over the Internet have been, and will likely continue to be, developed that further increase the number of competitors that all our businesses face and challenge existing business models. These distribution platforms are driving changes in consumer behavior as consumers seek more control over when, where and how they consume content and access communications services.

Consumers are increasingly turning to online sources for viewing and purchasing content, which has and likely will continue to reduce the number of our video customers and subscribers to our cable networks even as it makes our high-speed Internet services more important to consumers. While we are attempting to adapt our video service offerings to changing consumer behaviors, for example, by deploying our X1 platform and cloud DVR technology and adding apps such as Netflix on our X1 set-top boxes, virtual multichannel video providers, subscription video on demand services and programming networks that provide content directly to consumers over the Internet continue to gain consumer acceptance. Many of these service offerings charge no fee or a lower fee than our traditional video packages for access to their content, which could have an adverse effect on demand for our video services, including for expanded video packages, premium networks, and our DVR and On Demand services.

An increasing number of companies offering subscription video on demand services, including some that also offer exclusive high-quality original video programming, as well as programming networks offering content directly to consumers over the Internet, have increased the number of entertainment choices available to consumers, which has intensified audience fragmentation. The increase in entertainment choices adversely affects the audience ratings of our cable networks and broadcast television programming. Time-shifting technologies, such as video on demand services and DVR and cloud-based recording services, also reduce the viewing of content through traditional and virtual multichannel video providers, which has caused and likely will continue to cause audience ratings declines for our cable networks and broadcast television programming and may adversely affect the price and amount of advertising that advertisers are willing to purchase from us and the amount NBCUniversal receives for distribution of its content.

The success of any of these ongoing or future developments or our failure to effectively anticipate or adapt to emerging competitors or changes in consumer behavior, including among younger consumers, could have an adverse effect on our competitive position, businesses and results of operations.

A decline in advertisers’ expenditures or changes in advertising markets could negatively impact our businesses.

Our cable communications, cable networks and broadcast television businesses compete for the sale of advertising time with other television networks and stations, as well as with all other advertising platforms, such as digital media, radio and print. We derive substantial revenue from the sale of advertising, and a decline in expenditures by advertisers, including through traditional linear television distribution models, could negatively impact our results of operations. Declines can be caused by the economic prospects of specific advertisers or industries, increased competition for the leisure time of viewers and audience fragmentation, the growing use of new technologies and online distribution platforms, or the economy in general. In addition, advertisers’ willingness to purchase advertising from us may be adversely affected by lower audience ratings, which many of our networks have experienced and likely will continue to experience. Advertising sales and rates also are dependent on the methodology used for audience measurement and could be negatively affected if methodologies do not accurately reflect actual viewership levels. For example, certain methods of viewing content, such as viewing content through many online distribution platforms or delayed viewing on DVRs, might not be counted in audience measurements or may generate less, if any, revenue than traditional linear television distribution methods, which could have an adverse effect on our advertising revenue.

Our businesses depend on keeping pace with technological developments.

Our success is, to a large extent, dependent on our ability to acquire, develop, adopt and leverage new and existing technologies, and our competitors’ use of certain types of technology and equipment may provide them with a competitive advantage. For example, current and new wireless Internet technologies such as 4G and 5G wireless broadband services continue to evolve rapidly to allow for greater speed and reliability, and some companies and municipalities are building advanced fiber-based networks that provide very fast Internet access speeds. We expect other advances in communications technology to occur in the future. If we choose technology or equipment that is not as effective or attractive to consumers as that employed by our competitors, if we fail to employ technologies desired by consumers before our competitors do so, or if we fail to execute effectively on our technology initiatives, our businesses and results of operations could be adversely affected. We also will continue to incur additional costs as we execute our technology initiatives, such as the deployment of DOCSIS 3.1 and DOCSIS FDX and the continued development of our X1 set-top boxes, cloud DVR and wireless gateways. There can be no assurance that we can execute on these and other initiatives in a manner sufficient to grow or maintain our revenue or to compete successfully in the future. We also may generate less revenue or incur increased costs if changes in our competitors’ product offerings require that we offer certain of our existing services or enhancements at a lower or no cost to our customers or that we make additional research and development expenditures.



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We are subject to regulation by federal, state, local and foreign authorities, which impose additional costs and restrictions on our businesses.

Federal, state and local governments extensively regulate the video, high-speed Internet and voice services industries. Our broadcast television business is also highly regulated by federal laws and regulations. Our cable networks, filmed entertainment and theme parks businesses are also subject to various other laws and regulations at the international, federal, state and local levels. In addition, we are subject to conditions relating to the treatment of competitors and other matters set forth in the NBCUniversal Consent Decree, which is currently scheduled to expire in September 2018. The FCC and certain states also have been active in conducting inquiries and reviews, regarding our services, and this trend may continue. Failure to comply with the laws and regulations applicable to our businesses could result in administrative enforcement actions, fines, and civil and criminal liability.

Legislators and regulators at all levels of government frequently consider changing, and sometimes do change, existing statutes, rules, regulations, or interpretations thereof, or prescribe new ones, which may significantly affect our businesses. Any future legislative, judicial, regulatory or administrative actions may increase our costs or impose additional restrictions on our businesses, some of which may be significant. Congress may consider proposals to address communications issues, including whether it should rewrite the entire Communications Act to account for changes in the communications marketplace, whether it should enact new, permanent open Internet requirements, and whether it should fund new broadband infrastructure. We are unable to predict the effects of any of these or any other further legislative requirements on our businesses. Any changes to the legal and regulatory framework applicable to any of our services or businesses could have an adverse impact on our businesses and results of operations. For a more extensive discussion of the significant risks associated with the regulation of our businesses, see Item 1: Business and refer to the “Legislation and Regulation” discussion within that section.

Programming expenses for our video services are increasing, which could adversely affect our Cable Communications segment’s video business.

We expect programming expenses for our video services to continue to be our Cable Communications segment’s largest single expense item and to increase for the foreseeable future. The multichannel video provider industry has experienced continued increases in the cost of programming, especially sports programming, which we expect will continue for the foreseeable future. Our programming expenses may also increase as we add programming to our video services or distribute existing programming to more of our customers or through additional delivery platforms, such as On Demand or streaming services. Additionally, in the past few years, we have begun paying certain local broadcast television stations in exchange for their required consent for the retransmission of broadcast network programming to our video services customers; we expect to continue to be subject to increasing demands for payment and other concessions from local broadcast television stations. These market factors may be exacerbated by increased consolidation in the media industry, which may further increase our programming expenses. If we are unable to raise our customers’ rates or offset programming cost increases through the sale of additional services or cost management initiatives, the increasing cost of programming could have an adverse effect on our Cable Communications segment’s results of operations. Moreover, as our contracts with content providers expire, there can be no assurance that they will be renewed on acceptable terms or that they will be renewed at all, in which case we may be unable to provide such content as part of our video services, and our businesses and results of operations could be adversely affected.

NBCUniversal’s success depends on consumer acceptance of its content, and its businesses may be adversely affected if its content fails to achieve sufficient consumer acceptance or the costs to create or acquire content increase.

Most of NBCUniversal’s businesses create and acquire 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 cable network and broadcast television programming, filmed entertainment, theme park attractions and other content that meet the changing preferences of the broad domestic and international consumer markets. We have invested, and will continue to invest, substantial amounts in our content, including in the production of original content on our cable networks and broadcast television networks, in our films and for theme park attractions, before learning the extent to which it would earn consumer acceptance.

We also obtain a significant portion of our content from third parties, such as movie studios, television production companies, sports organizations and other suppliers. Competition for popular content, particularly for sports programming, is intense, and we may have to increase the price we are willing to pay or be outbid by our competitors for popular content. Entering into or renewing contracts for such programming rights or acquiring additional rights may result in significantly increased costs. Particularly with respect to long-term contracts for sports programming rights, our results of operations and cash flows over the term of a contract depend on a number of factors, including the strength of the advertising market, our audience size, the ability to secure distribution from and impose surcharges or obtain carriage on multichannel video providers for the content, and the timing and amount of our rights payments. There can be no assurance that revenue from these contracts will exceed our costs for the rights, as well as the



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other costs of producing and distributing the programming. If our content does not achieve sufficient consumer acceptance, or if we cannot obtain or retain rights to popular content on acceptable terms, or at all, our businesses may be adversely affected.

The loss of NBCUniversal’s programming distribution agreements, or the renewal of these agreements on less favorable terms, could adversely affect its businesses.

Our cable networks depend on their ability to secure and maintain distribution agreements with traditional and virtual multichannel video providers. Increasingly, our cable networks, broadcast television and filmed entertainment businesses are also entering into agreements to license their prior season and library content on other distribution platforms, including subscription video on demand services. If our programming does not attract sufficient viewers, traditional and virtual multichannel video providers may decide not to distribute our broadcast and cable networks, and subscription video on demand services may not license programming we create. In addition, the number of subscribers to our cable networks may be reduced as a result of multichannel video providers offering smaller packages of channels as part of their virtual or traditional television programming packages and by overall reduced viewing of television programming through multichannel video providers. Our broadcast television networks depend on their ability to secure and maintain network affiliation agreements with third-party local broadcast television stations in the markets where we do not own the affiliated local broadcast television station. In addition, every three years, each of our owned local broadcast television stations must elect, with respect to its retransmission by multichannel video providers within its DMA, either “must-carry” status, in which the distributor’s carriage of the station is mandatory and does not generate any compensation for the local station, or “retransmission consent,” in which the station gives up its right to mandatory carriage and instead seeks to negotiate the terms and conditions of carriage with the distributor, including the amount of compensation, if any, paid to the station by such distributor. For the current three-year period, which commenced on January 1, 2018, all of our owned NBC broadcast television stations and our owned Telemundo broadcast television stations elected retransmission consent. However, certain illegal online entities may stream our broadcast television content online without our consent and without paying any compensation to us. There can be no assurance that any of our distribution agreements will be renewed in the future on acceptable terms, or at all. The loss of any of these agreements, or the renewal of these agreements on less favorable terms, could reduce NBCUniversal’s revenue and the reach of our television programming and its attractiveness to advertisers, which in turn could adversely affect our cable networks, broadcast television and filmed entertainment businesses.

We rely on network and information systems and other technologies, as well as key properties, and a disruption, cyber attack, failure or destruction of such networks, systems, technologies or properties may disrupt our businesses.

Network and information systems and other technologies, including those related to our network management, customer service operations, and programming delivery, and technology embedded in our products and services, are critical to our business activities. Cyber threats and attacks are directed at both known and newly discovered software and hardware vulnerabilities and are constantly evolving, which increases the difficulty of detecting and successfully defending against them. Cyber threats and attacks can have cascading impacts that unfold with increasing speed across networks, information systems and other technologies. Network, information systems and technology-related events, including those caused by us, such as process breakdowns, security architecture or design vulnerabilities, or by third parties, such as computer hackings, cyber attacks, computer viruses, worms or other destructive or disruptive software, denial of service attacks, malicious social engineering or other malicious activities, or any combination of the foregoing, or power outages, natural disasters, infectious disease outbreaks, terrorist attacks or other similar events, could result in a degradation or disruption of our products and services, excessive call volume to call centers, theft or misuse of our intellectual property or other assets, a reduction in demand for our theme parks, disruption of the security of our internal systems and products and services, the compromise of confidential or technical business information or damage to our equipment, data, properties and reputation. These events also could result in large expenditures to repair or replace the damaged properties, products, services, networks or information systems to protect them from similar events in the future, and any such events could lead to litigation or otherwise have an adverse effect on our results of operations.

In addition, we may obtain certain confidential, proprietary and personal information about our customers, personnel and vendors, and may provide this information to third parties, in connection with our business. While we obtain assurances that these third parties will protect this information, there is a risk that this information may be compromised. Any security breaches, such as misappropriation, misuse, leakage, falsification or accidental release or loss of information maintained in our information technology systems, including customer, personnel and vendor data, could damage our reputation and require us to expend significant capital and other resources to remedy any such security breach, could lead to litigation or could cause regulators to impose fines or other remedies for failure to comply with relevant customer privacy rules.

The risk of these systems-related events and security breaches occurring continues to intensify in many of our businesses, and our businesses may be at a disproportionately heightened risk of these events occurring, due to the nature of our businesses and the fact that we maintain certain information necessary to conduct our business in digital form. In the ordinary course of our business, there are frequent attempts to cause such systems-related events and security breaches, and we have experienced minor systems-related events that, to date, have not resulted in any significant degradation or disruption to our network or information systems



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or our products, services or operations. While we develop and maintain systems, and operate an extensive security program, seeking to prevent systems-related events and security breaches from occurring, the development, maintenance and operation of these systems and programs is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. Despite our efforts to prevent these events and security breaches, there can be no assurance that they will not occur in the future or will not have an adverse effect on our businesses. Moreover, the amount and scope of insurance we maintain against losses resulting from any such events or security breaches likely would not be sufficient to cover our losses or otherwise adequately compensate us for any disruptions to our business that may result, and the occurrence of any such events or security breaches could have an adverse effect on our business.

Our businesses depend on using and protecting certain intellectual property rights and on not infringing the intellectual property rights of others.

We rely on our intellectual property, such as patents, copyrights, trademarks and trade secrets, as well as licenses and other agreements with our vendors and other third parties, to use various technologies, conduct our operations and sell our products and services. Legal challenges to our intellectual property rights and claims of intellectual property infringement by third parties could require that we enter into royalty or licensing agreements on unfavorable terms, incur substantial monetary liability, or be enjoined preliminarily or permanently from further use of the intellectual property in question, from importing into the United States hardware that uses such intellectual property or from the continuation of our businesses as currently conducted. We may need to change our business practices if any of these events occur, which may limit our ability to compete effectively and could have an adverse effect on our results of operations. Even if we believe any such challenges or claims are without merit, they can be time-consuming and costly to defend and divert management’s attention and resources away from our businesses. Moreover, if we are unable to obtain or continue to obtain licenses from our vendors and other third parties on reasonable terms, our businesses could be adversely affected.

In addition, intellectual property constitutes a significant part of the value of NBCUniversal’s businesses, and its success is highly dependent on protecting the intellectual property rights of the content it creates or acquires against third-party misappropriation, reproduction or infringement. The unauthorized reproduction, distribution or display of copyrighted material negatively affects our ability to generate revenue from the legitimate sale of our content, as well as from the sale of advertising in connection with our content, and increases our costs due to our active enforcement of our intellectual property rights.

Piracy and other unauthorized uses of content are made easier, and the enforcement of intellectual property rights more challenging, by technological advances that allow the conversion of programming, films and other content into digital formats, which facilitates the creation, transmission and sharing of high-quality unauthorized copies. In particular, piracy of programming and films through unauthorized distribution on DVDs, peer-to-peer computer networks and other platforms continues to present challenges for our cable networks, broadcast television and filmed entertainment businesses. While piracy is a challenge in the United States, it is particularly prevalent in many parts of the world that lack developed copyright laws, effective enforcement of copyright laws and technical protective measures like those in effect in the United States. If any U.S. or international laws intended to combat piracy and protect intellectual property rights are repealed or weakened or are not adequately enforced, or if the legal system fails to adapt to new technologies that facilitate piracy, we may be unable to effectively protect our rights, the value of our intellectual property may be negatively impacted and our costs of enforcing our rights may increase. See Item 1: Business and refer to the “Legislation and Regulation - Other Areas of Regulation - Intellectual Property” discussion for additional information.

We may be unable to obtain necessary hardware, software and operational support.

We depend on third-party vendors to supply us with a significant amount of the hardware, software and operational support necessary to provide certain of our services. Some of these vendors represent our primary source of supply or grant us the right to incorporate their intellectual property into some of our hardware and software products. While we actively monitor the operations and financial condition of key vendors in an attempt to detect any potential difficulties, there can be no assurance that we would timely identify any operating or financial difficulties associated with these vendors or that we could effectively mitigate our risks with respect to any such difficulties. If any of these vendors experience operating or financial difficulties, if our demand exceeds their capacity or if they are otherwise unable to meet our specifications or provide the equipment or services we need in a timely manner or at reasonable prices, our ability to provide some services may be adversely affected.

Weak economic conditions may have a negative impact on our businesses.

A substantial portion of our revenue comes from customers whose spending patterns may be affected by prevailing economic conditions. Weak economic conditions could adversely affect demand for any of our products and services and have a negative impact on our results of operations. For example, customers may reduce the level of cable 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 subscription video on demand services, or substitute services for our high-speed Internet and voice services, such as mobile phones, smartphones and Wi-Fi networks. Weak economic conditions also may have a negative



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impact on our advertising revenue, the performance of our films and home entertainment releases, and attendance and spending in our theme parks. Weak economic conditions and turmoil in the global financial markets may also impair the ability of third parties to satisfy their obligations to us, and any disruption in the global financial markets may affect our ability to obtain financing or refinance any existing debt on acceptable terms.

Acquisitions and other strategic initiatives present many risks, and we may not realize the financial and strategic goals that we had contemplated.

From time to time, we make acquisitions and investments and may pursue other strategic initiatives. In connection with such acquisitions and strategic initiatives, we may incur unanticipated expenses, fail to realize anticipated benefits, have difficulty incorporating an acquired or new line of business, disrupt relationships with current and new employees, customers and vendors, incur significant debt, or have to delay or not proceed with announced transactions or initiatives. For example, our launch of a wireless phone service in 2017 using virtual network operator rights has success-based working capital requirements, primarily associated with the procurement of handsets, which customers are able to pay for upfront or finance interest-free over 24 months, and other equipment, which could have negative effects on our cash flows. Additionally, regulatory agencies, such as the FCC or DOJ, may impose restrictions on the operation of our businesses as a result of our seeking regulatory approvals for any significant acquisitions and strategic initiatives, or may dissuade us from pursing certain transactions. The occurrence of any of these events could have an adverse effect on our businesses.

Labor disputes, whether involving employees or sports organizations, may disrupt our operations and adversely affect our businesses.

Many of NBCUniversal’s employees, including writers, directors, actors, technical and production personnel and others, as well as some of our on-air and creative talent employees, are covered by collective bargaining agreements or works councils. Most of NBCUniversal’s collective bargaining agreements are industry-wide agreements, and we may lack practical control over the negotiations and terms of the agreements. If we are unable to reach agreement with a labor union before the expiration of a collective bargaining agreement, our employees who were covered by that agreement may have a right to strike or take other actions that could adversely affect us, which could disrupt our operations and reduce our revenue, and the resolution of any disputes may increase our costs. There can be no assurance that we will renew our collective bargaining agreements as they expire or that we can renew them on favorable terms or without any work stoppages.

In addition, our cable networks and broadcast television networks have programming rights agreements of varying scope and duration with various sports organizations to broadcast and produce sporting events, including certain NFL, NHL, NBA and MLB games. Labor disputes in these and other sports organizations could have an adverse effect on our businesses.

The loss of key management personnel or popular on-air and creative talent could have an adverse effect on our businesses.

We rely on certain key management personnel in the operation of our businesses. While we maintain long-term and emergency transition plans for key management personnel and believe we could either identify internal candidates or attract outside candidates to fill any vacancy created by the loss of any key management personnel, the loss of one or more of our key management personnel could have a negative impact on our businesses. In addition, our cable networks, broadcast television and filmed entertainment businesses depend on the abilities and expertise of our on-air and creative talent. If we fail to retain our on-air or creative talent, if the costs to retain such talent increase materially, if we need to make significant termination payments, or if these individuals lose their current appeal, our businesses could be adversely affected.

We face risks relating to doing business internationally that could adversely affect our businesses.

We, primarily through NBCUniversal, operate our businesses worldwide. There are risks inherent in doing business internationally, including global financial market turmoil; economic volatility and global economic slowdown; currency exchange rate fluctuations and inflationary pressures; the requirements of local laws and customs relating to the publication and distribution of content and the display and sale of advertising; import or export restrictions and changes in trade regulations; difficulties in developing, staffing and managing foreign operations; issues related to occupational safety and adherence to diverse local labor laws and regulations; and potentially adverse tax developments. In addition, doing business internationally subjects us to risks relating to political or social unrest, as well as corruption and government regulation, including U.S. laws such as the Foreign Corrupt Practices Act, that impose stringent requirements on how we conduct our foreign operations. If any of these events occur, our businesses may be adversely affected.



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Our Class B common stock has substantial voting rights and separate approval rights over several potentially material transactions, and our Chairman and CEO has considerable influence over our company through his beneficial ownership of our Class B common stock.

Our Class B common stock has a non-dilutable 33¹/3% of the combined voting power of our Class A and Class B common stock. This non-dilutable voting power is subject to proportional decrease to the extent the number of shares of Class B common stock is reduced below 9,444,375, which was the number of shares of Class B common stock outstanding on the date of our 2002 acquisition of AT&T Corp.’s cable business, subject to adjustment in specified situations. Stock dividends payable on the Class B common stock in the form of Class B or Class A common stock do not decrease the non-dilutable voting power of the Class B common stock. The Class B common stock also has separate approval rights over several potentially material transactions, even if they are approved by our Board of Directors or by our other shareholders and even if they might be in the best interests of our other shareholders. These potentially material transactions include mergers or consolidations involving us, transactions (such as a sale of all or substantially all of our assets) or issuances of securities that require shareholder approval, transactions that result in any person or group owning shares representing more than 10% of the combined voting power of the resulting or surviving corporation, issuances of Class B common stock or securities exercisable or convertible into Class B common stock, and amendments to our articles of incorporation or by-laws that would limit the rights of holders of our Class B common stock. Brian L. Roberts, our chairman and CEO, beneficially owns all of the outstanding shares of our Class B common stock and, accordingly, has considerable influence over our company and the potential ability to transfer effective control by selling the Class B common stock, which could be at a premium.

Item 1B: Unresolved Staff Comments

None.

Item 2: Properties

We believe that substantially all of our physical assets were in good operating condition as of December 31, 2017. Our corporate headquarters and Cable Communications segment headquarters are located in Philadelphia, Pennsylvania at One Comcast Center. We own an 80% interest in an entity whose primary asset is One Comcast Center. In addition, we own an 80% interest in an entity that is currently constructing the Comcast Technology Center, which is adjacent to One Comcast Center. We also have leases for numerous business offices, warehouses and properties throughout the United States that house divisional information technology operations.

Cable Communications Segment

Our principal physical assets consist of operating plant and equipment, including cable system signal receiving, encoding and decoding devices, headends and distribution networks, and equipment at or near our customers’ homes. Our distribution network consists primarily of headends, content distribution servers, coaxial and fiber-optic cables, lasers, routers, switches and related electronic equipment. Our cable plant and related equipment generally are connected to utility poles under pole rental agreements with local public utilities, although in some areas the distribution cable is buried in underground ducts or trenches. Customer premise equipment consists primarily of set-top boxes, cable modems and wireless gateways. The physical components of cable systems require periodic maintenance and replacement.

Our cable system signal reception sites, which consist primarily of antenna towers and headends, and our microwave facilities are located on owned and leased parcels of land, and we own or lease space on the towers on which certain of our equipment is located. We own most of our service vehicles.

Our high-speed Internet network consists of fiber-optic cables owned or leased by us and related equipment. We also operate national and regional data centers with equipment that is used to provide services, such as email and web services, to our high-speed Internet and voice customers, as well as cloud services to our video customers. In addition, we maintain network operations centers with equipment necessary to monitor and manage the status of our services and network.

We own or lease buildings throughout the country that contain customer service call centers, retail stores and customer service centers, warehouses and administrative space. We also own a building that houses our digital media center. The digital media center contains equipment that we own or lease, including equipment related to network origination, video transmission via satellite and terrestrial fiber-optics, broadcast studios, post-production services and interactive television services.



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NBCUniversal Segments

NBCUniversal’s corporate headquarters are located in New York, New York at 30 Rockefeller Plaza. NBCUniversal owns the space it occupies at 30 Rockefeller Plaza. We also own or lease offices, studios, production facilities, screening rooms, retail operations, warehouse space, satellite transmission receiving facilities and data centers in numerous locations in the United States and around the world, including property for our owned local broadcast television stations. In addition, we own theme parks and own or lease related facilities in Orlando, Florida; Hollywood, California; and Osaka, Japan.

NBCUniversal Properties as of December 31, 2017



Location	Principal Use	Principal Segment in Which Used	Owned or Leased

30 Rockefeller Plaza New York, NY	NBCUniversal corporate headquarters, offices and studios	Headquarters and Other, Cable Networks and Broadcast Television	Owned

10 Rockefeller Plaza New York, NY	The Today Show studio, production facilities and offices	Broadcast Television	Leased

Universal City Universal City, CA	Offices, studios, theme park and retail operations	All	Owned

1000 Universal Studios Plaza Orlando, FL	Theme parks, production facilities, parking structures and administrative buildings	Theme Parks	Owned

2 Chome-1-33 Sakurajima, Konohana Ward, Osaka, Osaka Prefecture 554-0031, Japan	Theme park and administrative buildings	Theme Parks	Tangible properties owned on leased parcels of land

2290 W. 8th Ave. Hialeah, FL	Telemundo headquarters and production facilities	Headquarters and Other and Broadcast Television	Leased

Other

The Wells Fargo Center, a large, multipurpose arena in Philadelphia, Pennsylvania that we own, was the principal physical operating asset of our other businesses as of December 31, 2017.

Item 3: Legal Proceedings

Refer to Note 16 to Comcast’s consolidated financial statements included in this Annual Report on Form 10-K for a discussion of recent developments related to our legal proceedings.

NBCUniversal is subject to legal proceedings and claims that arise in the ordinary course of its business and it does not expect the final disposition of these matters to have a material adverse effect on its results of operations, cash flows or financial condition, although any such matters could be time-consuming and costly and could injure its reputation.

Item 4: Mine Safety Disclosures

Not applicable.



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Part II

Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Comcast’s Class A common stock is listed on the NASDAQ Global Select Market under the symbol CMCSA. There is no established public trading market for Comcast’s Class B common stock. The Class B common stock can be converted, on a share for share basis, into Class A common stock.

On January 24, 2017, our Board of Directors approved a two-for-one stock split in the form of a 100% stock dividend payable on February 17, 2017 to shareholders of record as of the close of business on February 8, 2017. All share and per share amounts are presented on a post-split basis.



Dividends Declared
2017			2016
Month Declared:	Dividend Per Share		Month Declared:	Dividend Per Share
January	$	0.1575	February	$	0.1375
May	$	0.1575	May	$	0.1375
July	$	0.1575	July	$	0.1375
October (paid in January 2018)	$	0.1575	October (paid in January 2017)	$	0.1375
Total	$	0.63	Total	$	0.55

We expect to continue to pay quarterly dividends, although each dividend is subject to approval by our Board of Directors. In January 2018, our Board of Directors approved a 21% increase in our dividend to $0.76 per share on an annualized basis.

Holders of Class A common stock in the aggregate hold 66²/3% of the voting power of our common stock. The number of votes that each share of Class A common stock has at any given time depends on the number of shares of Class A common stock and Class B common stock then outstanding, with each share of Class B common stock having 15 votes per share. The Class B common stock represents 33¹/3% of the combined voting power of our common stock, which percentage is generally non-dilutable under the terms of our articles of incorporation. Mr. Brian L. Roberts beneficially owns all outstanding shares of Class B common stock. Generally, including as to the election of directors, holders of Class A common stock and Class B common stock vote as one class except where class voting is required by law.

Record holders as of December 31, 2017 are presented in the table below.



Stock Class	Record Holders
Class A Common Stock	430,652
Class B Common Stock	3

The table below summarizes Comcast’s common stock repurchases during 2017.



Period	Total Number of Shares Purchased	Average Price Per Share		Total Number of Shares Purchased as Part of Publicly Announced Authorization	Total Dollar Amount Purchased Under the Publicly Announced Authorization		Maximum Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Authorization^(a)
First Quarter 2017	20,532,594	$	36.76	20,405,918	$	749,999,994	$	11,250,000,006
Second Quarter 2017	35,150,441	$	39.29	35,150,441	$	1,381,090,407	$	9,868,909,599
Third Quarter 2017	42,883,231	$	39.27	42,883,231	$	1,683,896,130	$	8,185,013,469
October 1-31, 2017	20,411,878	$	36.78	20,411,878	$	750,651,025	$	7,434,362,444
November 1-30, 2017	12,002,593	$	36.19	12,002,593	$	434,362,431	$	7,000,000,013
December 1-31, 2017	—	$	—	—	$	—	$	7,000,000,013
Total	130,980,737	$	38.21	130,854,061	$	4,999,999,987	$	7,000,000,013


(a)	Effective January 1, 2017, our Board of Directors increased our share repurchase program authorization to $12 billion, which does not have an expiration date. As of December 31, 2017, $7 billion remained under this authorization.

The total number of shares purchased during 2017 includes 126,676 shares received in the administration of employee share-based compensation plans.



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Under our publicly announced share repurchase program authorization, we may repurchase shares in the open market or in private transactions.

Comcast Common Stock Sales Price Table

The following table sets forth, for the indicated periods, the high and low sales prices of Comcast’s Class A common stock, on a post-split basis.



	High	Low
2017
First Quarter	$38.44	$34.12
Second Quarter	$42.18	$36.99
Third Quarter	$41.99	$36.44
Fourth Quarter	$41.24	$34.78
2016
First Quarter	$30.68	$26.17
Second Quarter	$32.71	$29.81
Third Quarter	$34.18	$32.13
Fourth Quarter	$35.66	$30.02



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Stock Performance Graph

Comcast

The following graph compares the annual percentage change in the cumulative total shareholder return on Comcast’s Class A common stock during the five years ended December 31, 2017 with the cumulative total returns on the Standard & Poor’s 500 Stock Index and a select peer group consisting of us and other companies engaged in the cable, communications and media industries. This peer group consists of our common stock, DISH Network Corporation (Class A), Charter Communications, Inc., AT&T Inc., Verizon Communications Inc., CenturyLink, Inc., and Sprint Corporation (the “transmission and distribution subgroup”); and Time Warner Inc., Walt Disney Company, Viacom Inc. (Class B), Twenty-First Century Fox, Inc. (Class A), and CBS Corporation (Class B) (the “media subgroup”).

The peer group is constructed as a composite peer group in which the transmission and distribution subgroup is weighted 61% and the media subgroup is weighted 39% based on the respective revenue of our Cable Communications and NBCUniversal segments. The comparison assumes $100 was invested on December 31, 2012 in our Class A common stock and in each of the following indices and assumes the reinvestment of dividends.



Comparison of 5 Year Cumulative Total Return



	2013		2014		2015		2016		2017
Comcast Class A		$141		$159		$158		$197		$231
S&P 500 Stock Index		$132		$150		$152		$170		$206
Peer Group Index		$131		$139		$137		$170		$178

NBCUniversal

NBCUniversal is a wholly owned subsidiary of NBCUniversal Holdings and there is no market for its equity securities.



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Item 6: Selected Financial Data

Comcast



Year ended December 31 (in millions, except per share data)	2017^(c)			2016			2015			2014			2013
Statement of Income Data
Revenue	$	84,526		$	80,403		$	74,510		$	68,775		$	64,657
Operating income	17,987			16,859			15,998			14,904			13,563
Net income attributable to Comcast Corporation^(a)	22,714			8,695			8,163			8,380			6,816
Basic earnings per common share attributable to Comcast Corporation shareholders^(b)	4.82			1.80			1.64			1.62			1.30
Diluted earnings per common share attributable to Comcast Corporation shareholders^(b)	4.75			1.78			1.62			1.60			1.28
Dividends declared per common share^(b)	0.63			0.55			0.50			0.45			0.39
Balance Sheet Data (at year end)
Total assets	$	186,949		$	180,500		$	166,574		$	159,186		$	158,672
Total debt, including current portion	64,556			61,046			52,621			48,081			47,706
Comcast Corporation shareholders’ equity	68,606			53,943			52,269			52,711			50,694
Statement of Cash Flows Data
Net cash provided by (used in):
Operating activities	21,403			19,825			19,485			17,596			14,685
Investing activities	(13,704		)	(18,385		)	(11,964		)	(8,733		)	(9,514		)
Financing activities	(7,572		)	(434		)	(9,136		)	(6,671		)	(14,404		)

(a)

For 2017, 2016 and 2015, refer to Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Annual Report on Form 10-K for a discussion of the effects of items impacting net income attributable to Comcast Corporation. In 2017, 2016, 2015, 2014 and 2013, net income attributable to Comcast Corporation is stated after deducting net income attributable to noncontrolling interests of $186 million, $350 million, $250 million, $212 million and $319 million, respectively.


(b)	Per share amounts are presented on a post-split basis (see Note 1 to Comcast’s consolidated financial statements).

(c)

2017 net income attributable to Comcast Corporation and earnings per common share attributable to Comcast Corporation shareholders included a $12.7 billion net income tax benefit as a result of the impacts of the 2017 tax reform legislation. Refer to Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 14 to Comcast’s consolidated financial statements for further discussion.

NBCUniversal

Omitted pursuant to General Instruction I(2)(a) to Form 10-K.



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Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction and Overview

We are a global media and technology company with two primary businesses, Comcast Cable and NBCUniversal. We present our operations for Comcast Cable in one reportable business segment, referred to as Cable Communications, and our operations for NBCUniversal in four reportable business segments: Cable Networks, Broadcast Television, Filmed Entertainment and Theme Parks (collectively, the “NBCUniversal segments”).

The following provides an overview of our businesses.

Consolidated Revenue, Net Income Attributable to Comcast Corporation and Adjusted EBITDA^(a)

(in billions)


(a)	Adjusted EBITDA is a performance measure that is not defined by generally accepted accounting principles in the United States (“GAAP”). Refer to the “Non-GAAP Financial Measure” section on page 50 for additional information, including our definition and our use of Adjusted EBITDA, and for a reconciliation from net income attributable to Comcast Corporation to Adjusted EBITDA.

2017 Consolidated Operating Results by Segment^(a)



		Revenue		Adjusted EBITDA


(a)	Charts exclude the results of NBCUniversal Headquarters and Other, Corporate and Other, and eliminations.



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Cable Communications Segment

Comcast Cable is one of the nation’s largest providers of video, high-speed Internet, voice, and security and automation services (“cable services”) to residential customers under the Xfinity brand; we also provide these and other services to business customers and sell advertising. As of December 31, 2017, our cable systems had 29.3 million total customer relationships, including 27.2 million residential customer relationships and 2.2 million business customer relationships, and passed more than 57 million homes and businesses.

Our Cable Communications segment generates revenue primarily from residential and business customers that subscribe to our cable services, which we market individually and as bundled services, and from the sale of advertising. Customers are typically billed in advance on a monthly basis based on the services and features they receive and the types of equipment they use. A portion of our residential customers are subject to minimum-term contracts for their cable services, which are typically 2 years in length. Substantially all of our business customers are initially under minimum-term contracts, which typically range from 2 to 5 years. Customers with minimum-term contracts may only discontinue service in accordance with the terms of their contracts.

NBCUniversal Segments

NBCUniversal is one of the world’s leading media and entertainment companies that develops, produces and distributes entertainment, news and information, sports, and other content for global audiences, and owns and operates theme parks worldwide.

Cable Networks

Our Cable Networks segment consists primarily of a diversified portfolio of cable television networks. Our cable networks are comprised of our national cable entertainment networks (USA Network, E!, Syfy, Bravo, Oxygen and Universal Kids), our national cable news and information networks (MSNBC, CNBC and CNBC World), our national cable sports networks (NBC Sports Network, Golf Channel and Olympic Channel), our regional sports and news networks, our international cable networks, our cable television studio production operations, and our various digital properties.

Our Cable Networks segment generates revenue primarily from the distribution and licensing of its programming and from the sale of advertising on its networks and digital properties.

Broadcast Television

Our Broadcast Television segment consists primarily of the NBC and Telemundo broadcast television networks, our NBC and Telemundo owned local broadcast television stations, the NBC Universo national cable network, our broadcast television studio production operations, and our various digital properties.

Our Broadcast Television segment generates revenue primarily from the sale of advertising on its networks and digital properties, from the licensing of its programming, and from the fees received under retransmission consent agreements and associated fees received from NBC-affiliated local broadcast television stations.

Filmed Entertainment

Our Filmed Entertainment segment primarily produces, acquires, markets and distributes filmed entertainment worldwide. Our films are produced primarily under the Universal Pictures, Illumination, DreamWorks Animation and Focus Features names.

Our Filmed Entertainment segment generates revenue primarily from the worldwide distribution of films we produce or acquire for exhibition in movie theaters and from the licensing and sale of produced and acquired films.

Theme Parks

Our Theme Parks segment consists primarily of our Universal theme parks in Orlando, Florida; Hollywood, California; and Osaka, Japan. In addition, along with a consortium of Chinese state-owned companies, we are developing a theme park in China.

Our Theme Parks segment generates revenue primarily from ticket sales and guest spending at our Universal theme parks.

Corporate and Other



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2017 Developments

The following are the more significant developments in our businesses during 2017:

Cable Communications Segment


•	An increase in revenue of 4.9% to $52.5 billion and an increase in Adjusted EBITDA of 5.3% to $21.2 billion


•	An increase in operating margin from 40.2% to 40.3% that reflects increases in high-speed Internet, video and business services revenue, offset by higher programming expenses


•	An increase in capital expenditures of 4.7% to $8.0 billion that reflects:


•	increased investments in scalable infrastructure to increase network capacity;


•	increased investments in line extensions, primarily for the expansion of our business services; and


•	decreased spending on customer premise equipment

NBCUniversal Segments


•	An increase in total NBCUniversal revenue of 4.4% to $33.0 billion; total NBCUniversal revenue increased 10.1% excluding $1.6 billion of revenue associated with our broadcast of the Rio Olympics in August 2016


•	An increase in total NBCUniversal Adjusted EBITDA of 14.1% to $8.2 billion


•	An increase in Cable Networks segment revenue of 1.6% and a decrease in Broadcast Television segment revenue of 5.9%, including the impact of our broadcast of the 2016 Rio Olympics; excluding revenue associated with the Olympics, Cable Networks and Broadcast Television segments revenue increased 6.0% and 6.6%, respectively, primarily due to increases in distribution revenue


•	An increase in Filmed Entertainment segment revenue of 20.4% primarily due to the success of The Fate of the Furious, Despicable Me 3 and Fifty Shades Darker


•	An increase in Theme Parks segment revenue of 10.0% reflecting the continued success of The Wizarding World of Harry Potter™ attraction in Hollywood, which opened in April 2016, and the openings of Minion Park™ in Japan in April 2017 and Volcano Bay™ in Orlando in May 2017


•	The acquisition of the remaining interests in Universal Studios Japan that we did not already own for $2.3 billion

Corporate and Other


•	The launch of our wireless phone service in the second quarter of 2017 to our residential cable customers


•	The acquisition of rights to $1.7 billion of spectrum, as well as the receipt of proceeds of $482 million related to NBCUniversal’s relinquishment of spectrum rights


•	Cash capital contributions to Atairos totaling $994 million, which brought our investment in Atairos to $2.4 billion as of December 31, 2017


•	The enactment of new federal tax reform legislation in December 2017 which, among other things, reduced the federal corporate tax rate to 21% from 35%, effective January 1, 2018, resulting in a $12.7 billion net income tax benefit recorded in the fourth quarter of 2017 primarily due to a reduction of our net deferred tax liability

Competition

The results of operations of our reportable business segments are affected by competition, as all of our businesses operate in intensely competitive, consumer-driven and rapidly changing environments and compete with a growing number of companies that provide a broad range of communications products and services and entertainment, news and information content to consumers. Technological changes are further intensifying and complicating the competitive landscape and challenging existing business models. In particular, consumers are increasingly turning to online sources for viewing and purchasing content, which has and likely will continue to reduce the number of our video customers and subscribers to our cable networks even as it makes our high-speed Internet services more valuable to consumers. In addition, the increasing number of entertainment choices available has intensified audience fragmentation, which has and likely will continue to adversely affect the audience ratings of our cable networks and broadcast television programming.

For additional information on the competition our businesses face, see Item 1: Business and Item 1A: Risk Factors. Within the Business section, refer to the “Competition” discussion, and within the Risk Factors section, refer to the risk factors entitled “Our businesses currently face a wide range of competition, and our businesses and results of operations could be adversely affected if we do not compete effectively” and “Changes in consumer behavior driven by online distribution platforms for viewing content could adversely affect our businesses and challenge existing business models.”



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Seasonality and Cyclicality

Each of our businesses is subject to seasonal and cyclical variations. In our Cable Communications segment, our results are impacted by the seasonal nature of residential customers receiving our cable services in college and vacation markets. This generally results in fewer net customer relationship additions in the second quarter of each year.

Revenue in our Cable Communications, Cable Networks and Broadcast Television segments is subject to cyclical advertising patterns and changes in viewership levels. Advertising revenue in the U.S. is generally higher in the second and fourth quarters of each year, due in part to increases in consumer advertising in the spring and in the period leading up to and including the holiday season. Advertising revenue in the U.S. is also cyclical, with a benefit in even-numbered years due to advertising related to candidates running for political office and issue-oriented advertising. Revenue in our Cable Networks and Broadcast Television segments fluctuates depending on the timing of when our programming is aired, which typically results in higher advertising revenue in the second and fourth quarters of each year.

Our revenue and operating costs and expenses (comprised of total costs and expenses, excluding depreciation and amortization expense and other operating gains) are cyclical as a result of our periodic broadcasts of major sporting events, such as the Olympic Games, which affect our Cable Networks and Broadcast Television segments, and the Super Bowl, which affects our Broadcast Television segment. In particular, our advertising revenue increases due to increased demand for advertising time and our distribution revenue increases in the period of these broadcasts. Our operating costs and expenses also increase as a result of our production costs for these broadcasts and the amortization of the related rights fees.

Revenue in our Filmed Entertainment segment fluctuates due to the timing, nature and number of films released in movie theaters, on standard-definition digital video discs and Blu-ray discs (together, “DVDs”), and through various other distribution platforms. Release dates are determined by several factors, including competition and the timing of vacation and holiday periods. As a result, revenue tends to be seasonal, with increases experienced each year during the summer months and around the holiday season. Content licensing revenue in our Cable Networks, Broadcast Television and Filmed Entertainment segments also fluctuates due to the timing of when our content is made available to licensees.

Revenue in our Theme Parks segment fluctuates with changes in theme park attendance that result from the seasonal nature of vacation travel and weather variations, local entertainment offerings and the opening of new attractions as well as with changes in currency exchange rates. Our theme parks generally experience peak attendance during the spring holiday period, the summer months when schools are closed and the holiday season.

Consolidated Operating Results



Year ended December 31 (in millions)	2017			2016			2015			% Change 2016 to 2017		% Change 2015 to 2016
Revenue	$	84,526		$	80,403		$	74,510		5.1	%	7.9	%
Costs and Expenses:
Programming and production	25,384			24,463			22,550			3.8		8.5
Other operating and administrative	25,013			23,416			21,325			6.8		9.8
Advertising, marketing and promotion	6,317			6,107			5,957			3.4		2.5
Depreciation	7,914			7,464			6,781			6.0		10.1
Amortization	2,353			2,094			1,899			12.4		10.3
Other operating gains	(442		)	—			—			NM		NM
Operating income	17,987			16,859			15,998			6.7		5.4
Other income (expense) items, net	(2,665		)	(2,506		)	(2,626		)	6.4		(4.6	)
Income before income taxes	15,322			14,353			13,372			6.7		7.3
Income tax benefit (expense)	7,578			(5,308		)	(4,959		)	NM		7.0
Net income	22,900			9,045			8,413			153.2		7.5
Net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock	(186		)	(350		)	(250		)	(46.6	)	39.3
Net income attributable to Comcast Corporation	$	22,714		$	8,695		$	8,163		161.2	%	6.5	%

Adjusted EBITDA^(a)	$	28,062		$	26,417		$	24,678		6.2	%	7.0	%

All percentages are calculated based on actual amounts. Minor differences may exist due to rounding.

Percentage changes that are considered not meaningful are denoted with NM.


(a)	Adjusted EBITDA is a non-GAAP performance measure. Refer to the “Non-GAAP Financial Measure” section on page 50 for additional information, including our definition and our use of Adjusted EBITDA, and for a reconciliation from net income attributable to Comcast Corporation to Adjusted EBITDA.



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Consolidated Revenue

The following graph illustrates the contributions to the increases in consolidated revenue made by our Cable Communications and NBCUniversal segments, as well as by Corporate and Other activities including eliminations.

The primary drivers of the changes in revenue were as follows:

2017


•	Growth in our Cable Communications segment driven by revenue from residential high-speed Internet and video services and business services


•	Growth in our NBCUniversal segments driven by Filmed Entertainment and Theme Parks, partially offset by revenue in 2016 associated with our broadcast of the 2016 Rio Olympics

2016


•	Growth in our Cable Communications segment driven by revenue from residential high-speed Internet and video services and business services


•	Our broadcast of the 2016 Rio Olympics, which was reported in our NBCUniversal segments

Revenue for our segments is discussed separately below under the heading “Segment Operating Results.” Revenue for our other businesses and business development initiatives is discussed separately under the heading “Corporate and Other Results of Operations.”



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Consolidated Costs and Expenses

The following graph illustrates the contributions to the increases in consolidated operating costs and expenses made by our Cable Communications and NBCUniversal segments, as well as by Corporate and Other activities including eliminations.

The primary drivers of the changes in operating costs and expenses were as follows:

2017


•	An increase in programming expenses in our Cable Communications segment


•	An increase in programming and production expenses in our Filmed Entertainment segment, partially offset by expenses in 2016 associated with our broadcast of the 2016 Rio Olympics


•	An increase in Corporate and Other activities driven by the launch of our wireless phone service

2016


•	An increase in programming expenses in our Cable Communications segment


•	Our broadcast of the 2016 Rio Olympics, which was reported in our NBCUniversal segments

Operating costs and expenses for our segments is discussed separately below under the heading “Segment Operating Results.” Operating costs and expenses for our corporate operations, other businesses and business development initiatives is discussed separately below under the heading “Corporate and Other Results of Operations.”



Consolidated Depreciation and Amortization Expense
Year ended December 31 (in millions)	2017		2016		2015		% Change 2016 to 2017		% Change 2015 to 2016
Cable Communications	$	8,143	$	7,670	$	7,051	6.2	%	8.8	%
NBCUniversal	2,041		1,805		1,539		13.1		17.3
Corporate and Other	83		83		90		(0.5	)	(7.3	)
Comcast Consolidated	$	10,267	$	9,558	$	8,680	7.4	%	10.1	%

Consolidated depreciation and amortization expense increased in 2017 and 2016 primarily due to increases in capital expenditures, as well as expenditures for software, in our Cable Communications segment in recent years. We continue to invest to increase our network capacity and in customer premise equipment, primarily for our X1 platform, cloud DVR technology and wireless gateways. Certain of these assets in our Cable Communications segment have relatively short estimated useful lives, which increased depreciation expense in 2017 and 2016 and will continue to increase depreciation expense in 2018. NBCUniversal depreciation and amortization expense also increased primarily due to our continued investment in new attractions in our Theme Parks segment, including for Universal Studios Japan.



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Consolidated Other Operating Gains

Consolidated other operating gains for 2017 included $337 million related to NBCUniversal’s relinquishment of spectrum rights (see Note 5 to Comcast’s consolidated financial statements and Note 4 to NBCUniversal’s consolidated financial statements) and $105 million related to the sale of a business in Corporate and Other (see Note 7 to Comcast’s consolidated financial statements).

Segment Operating Results

Our segment operating results are presented based on how we assess operating performance and internally report financial information. We use Adjusted EBITDA as the measure of profit or loss for our operating segments. Adjusted EBITDA is defined as net income attributable to Comcast Corporation before net (income) loss attributable to noncontrolling interests and redeemable subsidiary preferred stock, income tax benefit (expense), total other income (expense), depreciation and amortization expense, and other operating gains, and excluding impairment charges related to fixed and intangible assets and gains or losses on the sale of long-lived assets, if any. From time to time we may exclude from Adjusted EBITDA the impact of events, gains, losses or other charges (such as significant legal settlements) that affect the period-to-period comparability of our operating performance. Adjusted EBITDA for our segments is not a non-GAAP financial measure. We reconcile the aggregate amount of Adjusted EBITDA for our reportable business segments to consolidated income before income taxes in the notes to our consolidated financial statements (see Note 17 to Comcast’s consolidated financial statements and Note 15 to NBCUniversal’s consolidated financial statements).

To be consistent with our current management reporting presentation, certain 2016 and 2015 operating results were reclassified within the Cable Communications segment.

The revenue and operating costs and expenses associated with our broadcast of the 2016 Rio Olympics were reported in our Cable Networks and Broadcast Television segments. The revenue and operating costs and expenses associated with our broadcast of the 2015 Super Bowl were reported in our Broadcast Television segment.

Cable Communications Segment Results of Operations



Revenue and Adjusted EBITDA		Residential Customer Relationships
(in billions)		(in millions)



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Year ended December 31 (in millions)	2017		2016		2015		% Change 2016 to 2017		% Change 2015 to 2016
Revenue
Residential:
Video	$	23,129	$	22,357	$	21,526	3.5	%	3.9	%
High-speed Internet	14,769		13,532		12,471		9.1		8.5
Voice	3,391		3,540		3,608		(4.2	)	(1.9	)
Business services	6,216		5,514		4,751		12.7		16.1
Advertising	2,257		2,476		2,229		(8.8	)	11.1
Other	2,757		2,629		2,343		4.8		12.2
Total revenue	52,519		50,048		46,928		4.9		6.6
Operating costs and expenses
Programming	12,907		11,576		10,516		11.5		10.1
Technical and product support	6,425		6,323		5,985		1.6		5.6
Customer service	2,455		2,482		2,393		(1.1	)	3.7
Advertising, marketing and promotion	3,562		3,540		3,363		0.6		5.3
Franchise and other regulatory fees	1,518		1,481		1,382		2.4		7.2
Other	4,482		4,537		4,252		(1.2	)	6.7
Total operating costs and expenses	31,349		29,939		27,891		4.7		7.3
Adjusted EBITDA	$	21,170	$	20,109	$	19,037	5.3	%	5.6	%



Customer Metrics
	Total Customers						Net Additional Customers
(in thousands, except per customer amounts)	2017		2016		2015		2017		2016	2015
Video
Residential customers	21,303		21,488		21,385		(186	)	103	(123	)
Business services customers	1,054		1,019		962		35		57	87
Total video customers	22,357		22,508		22,347		(151	)	161	(36	)
High-speed Internet
Residential customers	23,863		22,827		21,610		1,036		1,218	1,202
Business services customers	2,006		1,874		1,719		132		155	165
Total high-speed Internet customers	25,869		24,701		23,329		1,168		1,373	1,367
Voice
Residential customers	10,316		10,546		10,436		(231	)	110	173
Business services customers	1,236		1,140		1,039		96		101	109
Total voice customers	11,552		11,687		11,475		(135	)	211	282
Security and automation
Security and automation customers	1,131		891		612		239		279	212
Customer relationships
Residential customer relationships	27,168		26,533		25,828		635		705	499
Business services customer relationships	2,179		2,044		1,887		135		157	170
Total customer relationships	29,347		28,577		27,715		770		862	670
Residential customer relationships mix
Single product customers	8,196		7,756		7,647		439		110	(101	)
Double product customers	9,056		8,797		8,478		259		319	339
Triple and quad product customers	9,916		9,980		9,703		(64	)	277	260
Average monthly total revenue per customer relationship	$	151.11	$	148.18	$	142.83

Customer metrics are presented based on actual amounts. Minor differences may exist due to rounding. For multiple dwelling units (“MDUs”), including buildings located on college campuses, whose residents have the ability to receive additional cable services, such as additional programming choices or our high-definition video (“HD”) or digital video recorder (“DVR”) advanced services, we count and report customers based on the number of potential billable relationships within each MDU. For MDUs whose residents are not able to receive additional cable services, the MDU is counted as a single customer. In 2017, we began to offer prepaid services that allow customers to prepay for at least 30 days of service. Residential video and high-speed Internet customers as of December 31, 2017 included prepaid customers totaling approximately 3,000 and 60,000, respectively. Customer relationships represent the number of residential and business customers that subscribe to at least one of our cable services. Single product, double product, and triple and quad product customers represent residential customers that subscribe to one, two, or three and four of our cable services, respectively. Beginning in 2017, we include customers subscribing to our security and automation services in customer relationship information. All periods presented have been adjusted for the inclusion of security and automation customers.



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Cable Communications Segment – Revenue

Video

Our Cable Communications segment offers a broad variety of video services packages that may include premium networks, pay-per-view services and our On Demand service. Our video customers may subscribe for additional fees to our HD and DVR advanced services. We continue to deploy set-top boxes for our Internet Protocol (“IP”) and cloud-enabled video platform, referred to as our X1 platform, and cloud DVR technology throughout our footprint.

Video revenue increased 3.5% and 3.9% in 2017 and 2016, respectively. The increases in revenue in both years were primarily due to rate adjustments and increases in the number of residential customers subscribing to additional services such as premium channels and advanced services, which accounted for substantially all of the increases in both 2017 and 2016. The increase in 2017 was partially offset by a decrease in the number of residential video customers. As of December 31, 2017, 15.0 million customers subscribed to at least one of our HD or DVR advanced services compared to 14.8 million customers and 13.9 million customers as of December 31, 2016 and 2015, respectively.

We have experienced, and may experience in the future, declines in the number of residential video customers due to competitive pressures and the impact of rate adjustments. Competition is intense, both from traditional multichannel video providers and from new technologies and distribution platforms for viewing content. We are responding to this competition, and have attempted to mitigate industry-wide declines in residential video customers at traditional multichannel video providers, through our X1 platform and sales and marketing programs, such as promotions, bundled service offerings and service offerings targeted at specific market segments. As of December 31, 2017, 39.1% of the homes and businesses in the areas we serve subscribed to our video services, compared to 39.9% and 40.1% as of December 31, 2016 and 2015, respectively.

High-Speed Internet

We offer high-speed Internet services with downstream speeds that range up to 1 gigabit per second (“Gbps”) and fiber-based speeds that range up to 2 Gbps. Throughout our footprint, we continue to deploy wireless gateways that combine a customer’s wireless router, cable modem and voice adapter to improve the performance of multiple IP-enabled devices used at the same time within the home, provide faster Internet speeds and create an in-home Wi-Fi network. We continue to expand our network of residential, outdoor and business Wi-Fi hotspots to allow most of our high-speed Internet customers to access our high-speed Internet services inside and outside the home. As of December 31, 2017, there were approximately 18.8 million of these hotspots.

High-speed Internet revenue increased 9.1% and 8.5% in 2017 and 2016, respectively. Increases in the number of residential customers receiving our high-speed Internet services accounted for increases in revenue of 5.1% and 5.8% in 2017 and 2016, respectively. The remaining increases in revenue in both 2017 and 2016 were primarily due to increases in the number of customers receiving higher levels of service and the impact of rate adjustments.

We believe our customer base will continue to grow as consumers choose our high-speed Internet service and seek higher-speed offerings. As of December 31, 2017, 45.2% of the homes and businesses in the areas we serve subscribed to our high-speed Internet services, compared to 43.8% and 41.9% as of December 31, 2016 and 2015, respectively.

Voice

We offer voice services that provide local and long-distance calling and other related features.

Voice revenue decreased 4.2% and 1.9% in 2017 and 2016, respectively. The decreases were primarily due to the allocation of voice revenue for our customers who receive bundled services. The amount allocated to voice revenue in the rate charged for bundled services decreased in both years because video and high-speed Internet rates increased while voice rates remained relatively flat. The decrease in revenue in 2017 was also partially due to a decrease in the number of residential voice customers, which may continue to decline.

As of December 31, 2017, 20.2% of the homes and businesses in the areas we serve subscribed to our voice services, compared to 20.7% and 20.6% as of December 31, 2016 and 2015, respectively.

Business Services

We offer a variety of products and services to meet the demands of businesses, with downstream speeds that range up to 1 Gbps and fiber-based speeds that range up to 10 Gbps. Our small business services offerings primarily include high-speed Internet services, as well as voice and video services, similar to those that we provide to our residential customers, and also include cloud-based solutions 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. In addition, we provide cellular backhaul services to mobile network operators to help these customers manage their network bandwidth.



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Business services revenue increased 12.7% and 16.1% in 2017 and 2016, respectively. The increases in 2017 and 2016 were primarily due to increases in the number of customers receiving our small business services offerings, as well as our medium-sized business services offerings. In 2017, 2016 and 2015, revenue from our small business services offerings represented the majority of our total business services revenue. We believe the increases in the number of business customers were primarily the result of our efforts to gain market share from competitors by offering competitive services and pricing, although the rate of growth in the number of our small business customers may slow as the business matures.

Advertising

Advertising revenue decreased 8.8% in 2017 primarily due to a decrease in political advertising revenue. Advertising revenue increased 11.1% in 2016 primarily due to an increase in political advertising revenue. Excluding the impact of political advertising revenue, advertising decreased 1.6% in 2017 and increased slightly in 2016.

In 2017, 5% of our Cable Communications segment advertising revenue was generated from our NBCUniversal segments, compared to 5% and 6% in 2016 and 2015, respectively. These amounts are eliminated in our consolidated financial statements but are included in the amounts presented above.

Other

Other revenue primarily includes revenue related to cable franchise and other regulatory fees. We also receive revenue related to fees from other services, such as our security and automation services. Cable franchise and other regulatory fees represent the fees we are required to pay 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 to which the fees apply.

Other revenue increased 4.8% and 12.2% in 2017 and 2016, respectively, primarily due to increases in cable franchise and other regulatory fees, revenue from our security and automation services, and our X1 licensing agreements.

Cable Communications Segment – Operating Costs and Expenses

Programming Expenses

Programming expenses, which represent our most significant operating expense, are the fees we incur to provide content to our video customers. These expenses are affected by the programming license fees charged by cable networks, the fees charged 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 expenses increased in 2017 and 2016 primarily due to the timing of contract renewals and other increases in programming license fees, including retransmission consent fees and sports programming costs.

We anticipate that our programming expenses will continue to increase as the fees we pay increase, including retransmission consent fees and sports programming costs; as we provide additional content to our video customers; and as we deliver this content through an increasing number of platforms, including On Demand, online and through our mobile apps.

Technical and Product Support Expenses

Technical and product support expenses include costs to complete service call and installation activities, as well as costs for network operations, product development, fulfillment and provisioning. Technical and product support expenses increased in 2017 and 2016 primarily due to expenses related to the development, deployment and support of our X1 platform, cloud DVR technology and wireless gateways, and continued growth in business services and security and automation services. The increase in 2016 was also due to expenses related to investments to improve the customer experience.



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Customer Service Expenses

Customer service expenses include the personnel and other costs associated with handling the sale of services to customers and customer service activity. Customer service expenses remained relatively flat in 2017 primarily due to reduced call volumes, which were partially offset by increased personnel costs. Customer service expenses increased in 2016 primarily due to increased support for improving the customer experience and increases in total labor costs, which reflected sales and support activities associated with the deployment of our X1 platform and wireless gateways, and growth in business services and security and automation services.

Advertising, Marketing and Promotion Expenses

Advertising, marketing and promotion expenses include the costs associated with attracting new customers and promoting our service offerings. Advertising, marketing and promotion expenses were relatively flat in 2017 compared to 2016. Advertising, marketing and promotion expenses in 2016 included an increase in advertising expenses associated with the 2016 Rio Olympics.

Franchise and Other Regulatory Fees

Cable franchise and other regulatory fees represent the fees we are required to pay to federal, state and local authorities under the terms of our cable franchise agreements. Franchise and other regulatory fees increased in 2017 and 2016 primarily due to increases in the revenue to which the fees apply.

Other Operating Costs and Expenses

Other operating costs and expenses remained relatively flat in 2017. Other operating costs and expenses increased in 2016 primarily due to an increase in costs to support our advertising sales business, as well as an increase in other administrative costs.

Cable Communications Segment – Operating Margin

Our Cable Communications segment operating margin is Adjusted EBITDA as a percentage of revenue. The most significant operating costs and expenses for our Cable Communications segment are the programming expenses we incur to provide content to our video customers, which increased 11.5% and 10.1% in 2017 and 2016, respectively. We will continue to focus on growing our revenue, particularly in our residential high-speed Internet and video services and in our business services, and on overall operating cost management.

Our Cable Communications segment operating margin was 40.3%, 40.2% and 40.6% in 2017, 2016 and 2015, respectively.

See Note 3 to Comcast’s consolidated financial statements for information on the impact of the adoption, effective January 1, 2018, of the new revenue recognition accounting guidance on our Cable Communication segment revenue and operating margin.

NBCUniversal Segments Overview

2017 NBCUniversal Segments Operating Results^(a)



		Revenue		Adjusted EBITDA

(a) Charts exclude the results of NBCUniversal Headquarters, Other, and eliminations.



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Year ended December 31 (in millions)	2017			2016			2015								% Change 2016 to 2017		% Change 2015 to 2016
	Actual			Actual			Actual			Pro Forma Adjustments^(a)		Pro Forma Combined			Actual		Actual		Pro Forma Combined
Revenue
Cable Networks	$	10,631		$	10,464		$	9,628		$	—	$	9,628		1.6	%	8.7	%
Broadcast Television	9,546			10,147			8,530			—		8,530			(5.9	)	19.0
Filmed Entertainment	7,658			6,360			7,287			—		7,287			20.4		(12.7	)
Theme Parks	5,443			4,946			3,339			1,052		4,391			10.0		48.2		12.7	%
Headquarters, other and eliminations	(281		)	(324		)	(322		)	—		(322		)	NM		NM
Total revenue	$	32,997		$	31,593		$	28,462		$	1,052	$	29,514		4.4	%	11.0	%	7.0	%
Adjusted EBITDA
Cable Networks	$	4,076		$	3,709		$	3,499		$	—	$	3,499		9.9	%	6.0	%
Broadcast Television	1,253			1,320			780			—		780			(5.0	)	69.1
Filmed Entertainment	1,277			697			1,234			—		1,234			83.3		(43.5	)
Theme Parks	2,384			2,190			1,464			488		1,952			8.9		49.6		12.2	%
Headquarters, other and eliminations	(745		)	(689		)	(625		)	—		(625		)	NM		NM
Total Adjusted EBITDA	$	8,245		$	7,227		$	6,352		$	488	$	6,840		14.1	%	13.8	%	5.7	%

(a)

Pro forma adjustments are presented as if the acquisition of the 51% interest of Universal Studios Japan occurred on January 1, 2014. Pro forma information does not include adjustments for transaction-related costs, costs related to integration activities, or cost savings or synergies that have been or may be achieved by the combined businesses. The pro forma amounts are primarily based on historical results of operations, adjusted for the allocation of purchase price, and are not necessarily indicative of what our results would have been had we operated Universal Studios Japan since January 1, 2014, nor of our future results.

Cable Networks Segment Results of Operations



Year ended December 31 (in millions)	2017		2016		2015		% Change 2016 to 2017		% Change 2015 to 2016
Revenue
Distribution	$	6,176	$	6,078	$	5,461	1.6	%	11.3	%
Advertising	3,397		3,566		3,435		(4.7	)	3.8
Content licensing and other	1,058		820		732		29.1		11.9
Total revenue	10,631		10,464		9,628		1.6		8.7
Operating costs and expenses
Programming and production	4,670		4,932		4,319		(5.3	)	14.2
Other operating and administrative	1,354		1,310		1,270		3.4		3.2
Advertising, marketing and promotion	531		513		540		3.5		(5.1	)
Total operating costs and expenses	6,555		6,755		6,129		(2.9	)	10.2
Adjusted EBITDA	$	4,076	$	3,709	$	3,499	9.9	%	6.0	%

Cable Networks Segment – Revenue

Distribution

Distribution revenue is generated from the distribution of our cable network programming to traditional and virtual multichannel video providers and is affected by the number of subscribers receiving our cable networks and the fees we charge per subscriber.

Distribution revenue increased in 2017 primarily due to increases in the contractual rates charged under distribution agreements and the timing of contract renewals, which were partially offset by revenue associated with our broadcast of the 2016 Rio Olympics and a continued decline in the number of subscribers of multichannel video providers at our cable networks. Distribution revenue increased in 2016 primarily due to increases in the contractual rates charged under distribution agreements and contract renewals, as well as revenue associated with our broadcast of the 2016 Rio Olympics, which were partially offset by a decline in the number of subscribers of multichannel video providers at our cable networks. Excluding $298 million of revenue associated with our broadcast of the 2016 Rio Olympics, distribution revenue increased 6.8% and 5.8% in 2017 and 2016, respectively.



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Advertising

Advertising revenue is generated from the sale of advertising units sold on our cable networks and digital properties. Advertising revenue is primarily based on the price we charge for each advertising unit, which is generally based on audience ratings, the value of our viewer demographics to advertisers and the number of advertising units we can place in our cable networks’ programming schedules. Advertising revenue is affected by the audience ratings of our programming, the strength of the national advertising market and general economic conditions.

Advertising revenue decreased in 2017 and increased in 2016 primarily due to revenue associated with our broadcast of the 2016 Rio Olympics. Excluding $134 million of revenue associated with our broadcast of the 2016 Rio Olympics, advertising revenue decreased 1.0% in 2017 and decreased slightly in 2016 as the impact of continued declines in audience ratings at our networks were partially offset by higher prices for advertising units sold.

Content Licensing and Other

Content licensing and other revenue is generated primarily from the licensing of our owned programming in the United States and internationally to cable and broadcast networks and subscription video on demand services, as well as from the sale of our owned programming on DVDs and through digital distribution services such as iTunes. In addition, our cable television studio production operations generate revenue from programming the studio produces for third-party networks and for subscription video on demand services.

Content licensing and other revenue increased in 2017 and 2016 primarily due to the timing of content provided under our licensing agreements.

In 2017, 2016 and 2015, 15%, 14% and 13%, respectively, of our Cable Networks segment revenue was generated from our Cable Communications segment. These amounts are eliminated in Comcast’s consolidated financial statements but are included in the amounts presented above.

Cable Networks Segment – Operating Costs and Expenses

Programming and Production Costs

Programming and production costs include the amortization of owned and acquired programming, sports rights, direct production costs, residual and participation payments, production overhead, costs associated with the distribution of our programming to third-party networks and other distribution platforms, and on-air talent costs.

Programming and production costs decreased in 2017 primarily due to costs associated with our broadcast of the 2016 Rio Olympics, which were partially offset by an increase in other sports programming rights costs and higher studio production costs in 2017. Programming and production costs increased in 2016 primarily due to costs associated with our broadcast of the 2016 Rio Olympics, as well as an increase in other sports programming rights costs.

Other Operating and Administrative Costs and Expenses

Other operating and administrative costs and expenses include salaries, employee benefits, rent and other overhead expenses. These expenses increased in 2017 and 2016 primarily due to increases in employee-related costs.

Advertising, Marketing and Promotion Expenses

Advertising, marketing and promotion expenses consist primarily of the costs associated with promoting programming on our cable networks and digital properties. Advertising, marketing and promotion expenses increased in 2017 primarily due to increased spending on marketing related to programming on our cable networks and our new digital platforms. Advertising, marketing and promotion expenses decreased in 2016 primarily due to increased spending on marketing in 2015 related to the launch of new programming on our cable networks.



	44	Comcast 2017 Annual Report on Form 10-K

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Broadcast Television Segment Results of Operations



Year ended December 31 (in millions)	2017		2016		2015		% Change 2016 to 2017		% Change 2015 to 2016
Revenue
Advertising	$	5,654	$	6,834	$	5,747	(17.3	)%	18.9	%
Content licensing	2,098		1,899		1,784		10.5		6.4
Distribution and other	1,794		1,414		999		26.9		41.5
Total revenue	9,546		10,147		8,530		(5.9	)	19.0
Operating costs and expenses
Programming and production	6,420		6,984		5,950		(8.1	)	17.4
Other operating and administrative	1,392		1,381		1,276		0.7		8.3
Advertising, marketing and promotion	481		462		524		4.2		(11.9	)
Total operating costs and expenses	8,293		8,827		7,750		(6.1	)	13.9
Adjusted EBITDA	$	1,253	$	1,320	$	780	(5.0	)%	69.1	%

Broadcast Television Segment – Revenue

Advertising

Advertising revenue is generated from the sale of advertising units sold on our broadcast networks, owned local broadcast television stations and digital properties. Advertising revenue is primarily based on the price we charge for each advertising unit, which is generally based on audience ratings and the value of our viewer demographics to advertisers, and the number of advertising units we can place in our broadcast networks’ and owned local television stations’ programming schedules. Advertising revenue is affected by the strength of the national and local advertising markets, general economic conditions, cyclicality related to political campaigns and issue-oriented advertising, and the success and ratings of our programming.

Advertising revenue decreased in 2017 and increased in 2016 primarily due to revenue associated with our broadcast of the 2016 Rio Olympics. Excluding $1.0 billion of revenue associated with our broadcast of the 2016 Rio Olympics, advertising revenue decreased 2.3% in 2017 as the impact of continued declines in audience ratings were partially offset by higher prices for advertising units sold. Excluding $1.0 billion and $376 million of revenue associated with our broadcasts of the 2016 Rio Olympics and the 2015 Super Bowl, respectively, advertising revenue increased 7.7% in 2016 as higher prices for advertising units sold, the premiere of Thursday Night Football and higher political advertising were partially offset by a decline in audience ratings.

Content Licensing

Content licensing revenue is generated from the licensing of our owned programming in the United States and internationally to various distribution platforms, including to cable and broadcast networks, and to subscription video on demand services. In addition, our broadcast television studio production operations develop and produce original content that they license to broadcast networks, cable networks and local broadcast television stations owned by us and third parties, as well as to subscription video on demand services. The production and distribution costs related to our owned programming generally exceed the revenue generated from the initial network license, which means the subsequent licensing of our owned programming series following the initial network license is critical to their financial success.

Content licensing revenue increased in 2017 and 2016 primarily due to the timing of content provided under our licensing agreements.

Distribution and Other

We generate distribution and other revenue primarily from fees for retransmission consent of our owned local broadcast television stations and associated fees received from NBC-affiliated local broadcast television stations, as well as from the sale of our owned programming on DVDs and through digital distribution services. The sale of our owned programming is driven primarily by the popularity of our broadcast networks and programming series and therefore fluctuates based on consumer spending and acceptance. Distribution and other revenue also includes distribution revenue associated with our periodic broadcasts of the Olympic Games.

Distribution and other revenue increased in 2017 primarily due to an increase in fees recognized under our retransmission consent agreements, which was partially offset by $140 million of revenue associated with our broadcast of the 2016 Rio Olympics. Distribution and other revenue increased in 2016 primarily due to an increase in fees recognized under our retransmission consent agreements, as well as revenue associated with our broadcast of the 2016 Rio Olympics.



Comcast 2017 Annual Report on Form 10-K	45

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Broadcast Television Segment – Operating Costs and Expenses

Programming and Production Costs

Programming and production costs relate to content originating on our broadcast networks and owned local broadcast television stations, as well as owned content that is licensed to third parties. These costs include the amortization of owned and acquired programming costs, sports rights, direct production costs, residual and participation payments, production overhead, costs associated with the distribution of our programming to third-party networks and other distribution platforms, and on-air talent costs.

Programming and production costs decreased in 2017 primarily due to costs associated with our broadcast of the 2016 Rio Olympics, which were partially offset by higher studio production costs, our continued investment in original programming and increases in other sports programming rights costs in 2017. Programming and production costs increased in 2016 primarily due to costs associated with our broadcast of the 2016 Rio Olympics, as well as our broadcast of Thursday Night Football, which were partially offset by costs in 2015 associated with our broadcast of the 2015 Super Bowl.

Other Operating and Administrative Costs and Expenses

Other operating and administrative costs and expenses include salaries, employee benefits, rent and other overhead expenses, and these costs increased slightly in 2017. These costs increased in 2016 primarily due to an increase in employee-related costs.

Advertising, Marketing and Promotion Expenses

Advertising, marketing and promotion expenses consist primarily of the costs associated with promoting our owned and acquired television programming, as well as the marketing of DVDs and costs associated with our digital properties. These expenses increased in 2017 primarily due to increased spending on marketing related to our entertainment and news programming. Advertising, marketing and promotion expenses decreased in 2016 primarily due to increased spending in 2015 for marketing of our NBC primetime lineup.