filings.toolsItem 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is provided as a supplement to, and should be read in conjunction with, the condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and our 2022 Annual Report on Form 10-K.
Overview
We are a global media and technology company with two primary businesses: Connectivity & Platforms and Content & Experiences. We present the operations of (1) our Connectivity & Platforms business in two reportable business segments: Residential Connectivity & Platforms and Business Services Connectivity and (2) our Content & Experiences business in three reportable business segments: Media, Studios and Theme Parks. Refer to Note 2 for information on our reportable business segments, including a description of the segment change implemented in the first quarter of 2023. All amounts are presented under the new segment structure.
Consolidated Operating Results
| Three Months Ended March 31, | Change | ||||||||||||||||||||||||||||||||||
| (in millions, except per share data) | 2023 | 2022 | % | ||||||||||||||||||||||||||||||||
| Revenue | $ | 29,691 | $ | 31,010 | (4.3) | % | |||||||||||||||||||||||||||||
| Costs and Expenses: | |||||||||||||||||||||||||||||||||||
| Programming and production | 9,004 | 10,570 | (14.8) | ||||||||||||||||||||||||||||||||
| Marketing and promotion | 1,963 | 2,062 | (4.8) | ||||||||||||||||||||||||||||||||
| Other operating and administrative | 9,301 | 9,260 | 0.4 | ||||||||||||||||||||||||||||||||
| Depreciation | 2,264 | 2,213 | 2.3 | ||||||||||||||||||||||||||||||||
| Amortization | 1,513 | 1,335 | 13.3 | ||||||||||||||||||||||||||||||||
| Total costs and expenses | 24,045 | 25,440 | (5.5) | ||||||||||||||||||||||||||||||||
| Operating income | 5,646 | 5,569 | 1.4 | ||||||||||||||||||||||||||||||||
| Interest expense | (1,010) | (993) | 1.6 | ||||||||||||||||||||||||||||||||
| Investment and other income (loss), net | 607 | 188 | NM | ||||||||||||||||||||||||||||||||
| Income before income taxes | 5,243 | 4,764 | 10.1 | ||||||||||||||||||||||||||||||||
| Income tax expense | (1,476) | (1,288) | 14.6 | ||||||||||||||||||||||||||||||||
| Net income | 3,767 | 3,476 | 8.4 | ||||||||||||||||||||||||||||||||
| Less: Net income (loss) attributable to noncontrolling interests | (67) | (73) | (8.4) | ||||||||||||||||||||||||||||||||
| Net income attributable to Comcast Corporation | $ | 3,834 | $ | 3,549 | 8.0 | % | |||||||||||||||||||||||||||||
| Basic earnings per common share attributable to Comcast Corporation shareholders | $ | 0.91 | $ | 0.79 | 15.2 | % | |||||||||||||||||||||||||||||
| Diluted earnings per common share attributable to Comcast Corporation shareholders | $ | 0.91 | $ | 0.78 | 16.7 | % | |||||||||||||||||||||||||||||
| Adjusted EBITDA(a) | $ | 9,415 | $ | 9,150 | 2.9 | % |
Percentage changes that are considered not meaningful are denoted with NM.
(a)Adjusted EBITDA is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section on page 25 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.
Consolidated revenue decreased for the three months ended March 31, 2023, driven by decreases in the Content & Experiences and Connectivity & Platforms businesses. Revenue for our reportable business segments and other businesses is discussed separately below under the heading “Segment Operating Results.”
Consolidated costs and expenses, excluding depreciation and amortization expense, decreased for the three months ended March 31, 2023, driven by decreases in the Content & Experiences and Connectivity & Platforms businesses, partially offset by an increase in Corporate and Other. Costs and expenses for our reportable business segments and our corporate operations and other businesses are discussed separately below under the heading “Segment Operating Results.”
Consolidated depreciation and amortization expense increased for the three months ended March 31, 2023 primarily due to an increase in the amortization of software, partially offset by the impact of foreign currency.
Amortization expense from acquisition-related intangible assets totaled $556 million and $592 million for the three months ended March 31, 2023 and March 31, 2022, respectively. Amounts primarily relate to customer relationship intangible assets recorded in connection with the Sky transaction in 2018 and the NBCUniversal transaction in 2011.
Consolidated interest expense increased for the three months ended March 31, 2023 primarily due to higher weighted-average interest rates.
Consolidated investment and other income (loss), net increased for the three months ended March 31, 2023 compared to the same period in 2022.
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | 2022 | |||||||||||||||||||||||||||||||||
| Equity in net income (losses) of investees, net | $ | 485 | $ | 133 | |||||||||||||||||||||||||||||||
| Realized and unrealized gains (losses) on equity securities, net | (6) | 117 | |||||||||||||||||||||||||||||||||
| Other income (loss), net | 128 | (62) | |||||||||||||||||||||||||||||||||
| Total investment and other income (loss), net | $ | 607 | $ | 188 |
The change in investment and other income (loss), net was primarily due to our investment in Atairos and changes in other income (loss), net and realized and unrealized gains (losses) on equity securities, net. The income (losses) at Atairos were driven by fair value adjustments on its underlying investments with income (loss) of $524 million and $78 million for the three months ended March 31, 2023 and March 31, 2022, respectively. The change in other income (loss), net for the three months ended March 31, 2023 compared to the same period in 2022 primarily resulted from foreign exchange remeasurement losses in the prior year period, gains on insurance contracts compared to losses in the prior year period and increased interest income compared to the prior year period. The change in realized and unrealized gains (losses) on equity securities, net for the three months ended March 31, 2023 compared to the same period in 2022 was primarily due to gains on nonmarketable securities in the prior year period, partially offset by losses on marketable securities in the prior year period.
Consolidated income tax expense for the three months ended March 31, 2023 and 2022 reflects an effective income tax rate that differs from the federal statutory rate due to state and foreign income taxes and adjustments associated with uncertain tax positions. The increase in income tax expense for the three months ended March 31, 2023 compared to the same period in 2022 was primarily driven by higher income before income taxes.
Consolidated net income (loss) attributable to noncontrolling interests changed for the three months ended March 31, 2023 compared with the same period in 2022 primarily due to lower losses at Universal Beijing Resort as a result of increased operations in the current year period, partially offset by losses in our Xumo streaming platform joint venture in the current year.
Segment Operating Results
Our segment operating results are presented based on how we assess operating performance and internally report financial information. See Note 2 for additional information on our reportable business segments.
Connectivity & Platforms Results of Operations
| Three Months Ended March 31, | Change | Constant Currency Change(b) | ||||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | 2022 | % | % | ||||||||||||||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||||||||||||||
| Residential Connectivity & Platforms | $ | 17,869 | $ | 18,340 | (2.6) | % | (0.7) | % | ||||||||||||||||||||||||||||||||||||
| Business Services Connectivity | 2,283 | 2,172 | 5.1 | 5.2 | ||||||||||||||||||||||||||||||||||||||||
| Total Connectivity & Platforms revenue | $ | 20,153 | $ | 20,512 | (1.8) | % | (0.1) | % | ||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||||||||
| Residential Connectivity & Platforms | $ | 6,762 | $ | 6,611 | 2.3 | % | 3.2 | % | ||||||||||||||||||||||||||||||||||||
| Business Services Connectivity | 1,332 | 1,233 | 8.0 | 7.9 | ||||||||||||||||||||||||||||||||||||||||
| Total Connectivity & Platforms Adjusted EBITDA | $ | 8,093 | $ | 7,844 | 3.2 | % | 3.9 | % | ||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA Margin**(a)** | ||||||||||||||||||||||||||||||||||||||||||||
| Residential Connectivity & Platforms | 37.8 | % | 36.0 | % | 180 bps | 140 bps | ||||||||||||||||||||||||||||||||||||||
| Business Services Connectivity | 58.3 | 56.8 | 150 bps | 150 bps | ||||||||||||||||||||||||||||||||||||||||
| Total Connectivity & Platforms Adjusted EBITDA margin | 40.2 | % | 38.2 | % | 200 bps | 160 bps |
(a)Our Adjusted EBITDA margin is Adjusted EBITDA as a percentage of revenue. We believe this metric is useful particularly as we continue to focus on growing our high-margin businesses and improving overall operating cost management. Change in Adjusted EBITDA margin reflects the year-over-year basis point change.
(b)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section on page 25 for additional information, including our definition and our use of constant currency, and for a reconciliation of constant currency amounts.
We continue to focus on growing our higher-margin connectivity businesses while managing overall operating costs. We also continue to invest in our network to support higher-speed broadband offerings and to expand the number of homes and businesses passed. Our customer relationships growth has slowed primarily reflecting continued low domestic household move levels and an increasingly competitive environment. We believe our residential connectivity revenue will increase as a result of growth in average domestic broadband revenue per customer, as well as increases in domestic wireless and international connectivity revenue. At the same time, we expect continued declines in video revenue as a result of domestic customer net losses due to shifting video consumption patterns and the competitive environment, although customer net losses typically partially mitigate the impact of continued rate increases on programming expenses. We also expect continued declines in other revenue in wireline voice revenue. Global economic conditions and consumer sentiment have in the past, and may continue to, adversely impact demand for our products and services and our results of operations. In addition, currency exchange rates have impacted our Residential Connectivity & Platforms segment results as a result of the strengthening of the U.S. dollar, relative primarily to the British pound and euro.
We believe our Business Services Connectivity segment will continue to grow by offering competitive services, including to medium-sized and enterprise customers.
Connectivity & Platforms Customer Metrics
| Net Additions / (Losses) | ||||||||||||||||||||||||||
| March 31, | Three Months Ended March 31, | |||||||||||||||||||||||||
| (in thousands) | 2023 | 2022(d) | 2023 | 2022(d) | ||||||||||||||||||||||
| Customer relationships | ||||||||||||||||||||||||||
| Domestic Residential Connectivity & Platforms customer relationships(a) | 31,826 | 31,993 | (34) | 184 | ||||||||||||||||||||||
| International Residential Connectivity & Platforms customer relationships(a) | 18,051 | 17,908 | 111 | (122) | ||||||||||||||||||||||
| Business Services Connectivity customer relationships(b) | 2,630 | 2,592 | 5 | 19 | ||||||||||||||||||||||
| Total Connectivity & Platforms customer relationships | 52,507 | 52,494 | 82 | 81 | ||||||||||||||||||||||
| Domestic broadband | ||||||||||||||||||||||||||
| Residential customers | 29,815 | 29,836 | 3 | 253 | ||||||||||||||||||||||
| Business customers | 2,508 | 2,485 | 2 | 12 | ||||||||||||||||||||||
| Total domestic broadband customers | 32,324 | 32,320 | 5 | 264 | ||||||||||||||||||||||
| Domestic wireless | ||||||||||||||||||||||||||
| Total domestic wireless lines(c) | 5,668 | 4,298 | 355 | 318 | ||||||||||||||||||||||
| Domestic video | ||||||||||||||||||||||||||
| Total domestic video customers | 15,528 | 17,664 | (614) | (512) | ||||||||||||||||||||||
(a)Residential Connectivity & Platforms customer relationships generally represent the number of residential customer locations that subscribe to at least one of our services. International Residential Connectivity & Platforms customer relationships represent customers receiving Sky services in the Connectivity & Platforms markets. Previously reported total Sky customer relationships of approximately 23 million as of December 31, 2022 also included approximately 5 million customer relationships receiving Sky services outside of the Connectivity & Platforms markets. Because each of our services includes a variety of product tiers, which may change from time to time, net additions or losses in any one period will reflect a mix of customers at various tiers.
(b)Business Services Connectivity customer metrics are generally counted based on the number of locations receiving services, including locations within our distribution system in the United States, as well as locations outside of our distribution system both in the United States and internationally. Certain arrangements whereby third parties provide connectivity services leveraging our distribution system are also generally counted based on the number of locations served.
(c)Domestic wireless lines represent the number of residential and business customers’ wireless devices. An individual customer relationship may have multiple wireless lines.
(d)Customer metrics for 2022 have been updated to reflect the new segment presentation, and to align methodologies for counting business customer metrics to: (1) include locations receiving our services outside of our distribution system and (2) now count certain customers based on the number of locations receiving services, including arrangements whereby third parties provide connectivity services leveraging our distribution system. These changes in methodology were not material to any period presented.
| Three Months Ended March 31, | Change | Constant Currency Change(a) | |||||||||||||||||||||||||||||||||
| 2023 | 2022 | % | % | ||||||||||||||||||||||||||||||||
| Average monthly total Connectivity & Platforms revenue per customer relationship | $ | 128.04 | $ | 130.35 | (1.8) | % | (0.1) | % | |||||||||||||||||||||||||||
| Average monthly total Connectivity & Platforms Adjusted EBITDA per customer relationship | $ | 51.42 | $ | 49.85 | 3.1 | % | 3.9 | % |
(a)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section on page 25 for additional information, including our definition and our use of constant currency, and for a reconciliation of constant currency amounts.
Average monthly total revenue per customer relationship is impacted by rate adjustments and changes in the types and levels of services received by our residential and business customers, as well as changes in advertising and other revenue and in foreign currency exchange rates. While revenue from our individual service offerings is also impacted by changes in the allocation of revenue among services sold in a bundle, the allocation does not impact average monthly total revenue per customer relationship. Each of our services has a different contribution to Adjusted EBITDA margin. We use average monthly Adjusted EBITDA per customer relationship to evaluate the profitability of our customer base across our service offerings. We believe both metrics are useful to understand the trends in our business, and average monthly Adjusted EBITDA per customer relationship is useful particularly as we continue to focus on growing our higher-margin businesses.
Connectivity & Platforms — Supplemental Costs and Expenses Information
Connectivity & Platforms supplemental costs and expenses information in the table below is presented on an aggregate basis across the Connectivity & Platforms segments as the segments use certain shared infrastructure, including the cable distribution network in the United States. Costs and expenses information reported separately for the Residential Connectivity & Platforms and Business Services Connectivity segments include each segment’s direct costs and an allocation of shared costs.
| Three Months Ended March 31, | Change | Constant Currency Change(g) | |||||||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | 2022 | % | % | |||||||||||||||||||||||||||||||||||||
| Costs and Expenses | |||||||||||||||||||||||||||||||||||||||||
| Programming(a) | $ | 4,600 | $ | 4,884 | (5.8) | % | (3.8) | % | |||||||||||||||||||||||||||||||||
| Technical and support(b) | 1,830 | 1,949 | (6.1) | (4.8) | |||||||||||||||||||||||||||||||||||||
| Direct product costs(c) | 1,401 | 1,339 | 4.7 | 10.2 | |||||||||||||||||||||||||||||||||||||
| Marketing and promotion(d) | 1,202 | 1,332 | (9.7) | (7.9) | |||||||||||||||||||||||||||||||||||||
| Customer service(e) | 709 | 736 | (3.6) | (1.8) | |||||||||||||||||||||||||||||||||||||
| Other(f) | 2,317 | 2,429 | (4.6) | (2.5) | |||||||||||||||||||||||||||||||||||||
| Total Connectivity & Platforms costs and expenses | $ | 12,059 | $ | 12,668 | (4.8) | % | (2.6) | % |
(a)Programming expenses, which represent our most significant operating expense, are the fees we incur to provide video services to our customers, and primarily include fees related to the distribution of television network programming and fees charged for retransmission of the signals from local broadcast television stations. These expenses also include the costs of content on the Sky-branded entertainment television channels, including amortization of licensed programming.
(b)Technical and support expenses primarily include costs for labor to complete service call and installation activities; and costs for network operations and satellite transmission, product development, fulfillment and provisioning.
(c)Direct product costs primarily include access fees related to using wireless and broadband networks owned by third parties to deliver our services and costs of products sold, including wireless devices and Sky Glass smart televisions.
(d)Marketing and promotion expenses include the costs associated with attracting new customers and promoting our service offerings.
(e)Customer service expenses include the personnel and other costs associated with customer service and certain selling activities.
(f)Other expenses primarily include administrative personnel costs; franchise and other regulatory fees; fees paid to third parties where we represent the advertising sales efforts; other business support costs, including building and office expenses, taxes and billing costs; and bad debt.
(g)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section on page 25 for additional information, including our definition and our use of constant currency, and for a reconciliation of constant currency amounts.
Residential Connectivity & Platforms Segment Results of Operations
| Three Months Ended March 31, | Change | Constant Currency Change(a) | |||||||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | 2022 | % | % | |||||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||||||||
| Domestic broadband | $ | 6,343 | $ | 6,050 | 4.8 | % | 4.8 | % | |||||||||||||||||||||||||||||||||
| Domestic wireless | 858 | 677 | 26.7 | 26.7 | |||||||||||||||||||||||||||||||||||||
| International connectivity | 897 | 840 | 6.8 | 17.8 | |||||||||||||||||||||||||||||||||||||
| Total residential connectivity | 8,099 | 7,568 | 7.0 | 8.1 | |||||||||||||||||||||||||||||||||||||
| Video | 7,382 | 8,002 | (7.7) | (5.5) | |||||||||||||||||||||||||||||||||||||
| Advertising | 907 | 1,073 | (15.5) | (12.7) | |||||||||||||||||||||||||||||||||||||
| Other | 1,482 | 1,698 | (12.7) | (10.5) | |||||||||||||||||||||||||||||||||||||
| Total revenue | 17,869 | 18,340 | (2.6) | (0.7) | |||||||||||||||||||||||||||||||||||||
| Costs and Expenses | |||||||||||||||||||||||||||||||||||||||||
| Programming | 4,600 | 4,884 | (5.8) | (3.8) | |||||||||||||||||||||||||||||||||||||
| Other | 6,508 | 6,846 | (4.9) | (2.3) | |||||||||||||||||||||||||||||||||||||
| Total costs and expenses | 11,108 | 11,729 | (5.3) | (2.9) | |||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 6,762 | $ | 6,611 | 2.3 | % | 3.2 | % |
(a)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section on page 25 for additional information, including our definition and our use of constant currency, and for a reconciliation of constant currency amounts.
Residential Connectivity & Platforms Segment – Revenue
Domestic broadband revenue consists of revenue from sales of broadband services to residential customers in the United States, including equipment and installation services. Domestic broadband revenue also includes revenue related to our customers’ use of Flex streaming devices and commission revenue related to sales of third-party direct-to-consumer (“DTC”) streaming services.
Domestic broadband revenue increased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to an increase in average rates.
Domestic wireless revenue consists of revenue from sales of wireless services and devices, including handsets, tablets and smart watches, to residential customers in the United States.
Domestic wireless revenue increased for the three months ended March 31, 2023 compared to the same period in 2022 due to an increase in the number of customer lines and device sales.
International connectivity revenue consists of revenue from sales of broadband services, including equipment and installation services, wireless services and wireless devices to residential customers in the Connectivity & Platforms markets in Europe, as well as commission revenue related to sales of third-party DTC streaming services.
International connectivity revenue increased for the three months ended March 31, 2023 compared to the same period in 2022 due to increases in wireless revenue, resulting from increases in sales of wireless devices and wireless services, and broadband revenue. Wireless and broadband revenues were negatively impacted by foreign currency.
Video revenue consists of revenue from sales of video services to residential and business customers across the Connectivity & Platforms markets, including equipment and installation services. Video includes pay-per-view and other transactional revenue and franchise fees, as well as revenue from sales of certain hardware, including Sky Glass smart televisions.
Video revenue decreased for the three months ended March 31, 2023 compared to the same period in 2022 due to a decline in the number of video customers and the negative impact of foreign currency, partially offset by an increase in average rates.
Advertising revenue includes revenue from the sale of advertising across our platforms in the Connectivity & Platforms markets, including advertising as part of our distribution agreements with linear television networks in the United States, and advertising on Sky-branded entertainment television channels and digital properties. Advertising also includes revenue where we represent the sales efforts of third parties and from our advanced advertising businesses.
Advertising revenue decreased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to overall market weakness, the negative impact of foreign currency and a decline in domestic political advertising in the current year period.
Other revenue includes revenue in the Connectivity & Platforms markets from sales of wireline voice services to residential customers; our residential security and automation services businesses; the licensing of our technology platforms to other multichannel video providers; the distribution of our Sky-branded entertainment television channels on third-party platforms; commissions from electronic retailing networks; and certain billing and collection fees.
Other revenue decreased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to a decrease in voice revenue driven by a decline in the number of residential wireline voice customers and a decrease due to the negative impact of foreign currency.
Residential Connectivity & Platforms Segment – Costs and Expenses
Programming expenses decreased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to a decline in the number of domestic video subscribers and the impact of foreign currency, partially offset by domestic contractual rate increases and an increase in programming expenses for international sports channels.
Other expenses decreased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to the impact of foreign currency, decreased spending on marketing and promotion, lower technical and support costs, and a decrease in fees paid to third-party channels relating to advertising sales. These decreases were partially offset by increased direct product costs associated with our wireless service resulting from increases in device sales and the number of customers receiving the service.
Business Services Connectivity Segment Results of Operations
| Three Months Ended March 31, | Change | |||||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | 2022 | % | |||||||||||||||||||||||||||||||||||
| Revenue | $ | 2,283 | $ | 2,172 | 5.1 | % | ||||||||||||||||||||||||||||||||
| Costs and expenses | 952 | 938 | 1.4 | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 1,332 | $ | 1,233 | 8.0 | % |
Business services connectivity revenue primarily consists of revenue from our connectivity service offerings for small business locations, which include broadband, voice and wireless services, as well as our solutions for medium-sized customers and larger enterprises.
Business services connectivity revenue increased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to an increase in revenue from small business customers driven by an increase in average rates, and an increase in revenue from medium-sized and enterprise customers.
Business services connectivity costs and expenses increased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to an increase in direct product costs.
Content & Experiences Results of Operations
| Three Months Ended March 31, | Change | |||||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | 2022 | % | |||||||||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||||||||
| Media | $ | 6,152 | $ | 7,758 | (20.7) | % | ||||||||||||||||||||||||||||||||
| Studios | 2,956 | 2,907 | 1.7 | |||||||||||||||||||||||||||||||||||
| Theme Parks | 1,949 | 1,560 | 24.9 | |||||||||||||||||||||||||||||||||||
| Headquarters and Other | 19 | 16 | 16.3 | |||||||||||||||||||||||||||||||||||
| Eliminations | (817) | (901) | 9.4 | |||||||||||||||||||||||||||||||||||
| Total Content & Experiences revenue | $ | 10,259 | $ | 11,339 | (9.5) | % | ||||||||||||||||||||||||||||||||
| Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||
| Media | $ | 880 | $ | 1,181 | (25.5) | % | ||||||||||||||||||||||||||||||||
| Studios | 277 | 245 | 13.3 | |||||||||||||||||||||||||||||||||||
| Theme Parks | 658 | 451 | 46.0 | |||||||||||||||||||||||||||||||||||
| Headquarters and Other | (232) | (191) | (21.3) | |||||||||||||||||||||||||||||||||||
| Eliminations | 24 | (62) | NM | |||||||||||||||||||||||||||||||||||
| Total Content & Experiences Adjusted EBITDA | $ | 1,607 | $ | 1,623 | (1.0) | % |
Percentage changes that are considered not meaningful are denoted with NM.
We operate our Media segment as a combined television and streaming business. We expect that the number of subscribers and audience ratings at our linear networks will continue to decline as a result of the competitive environment and shifting video consumption patterns, which we aim to mitigate over time by continued growth in Peacock paid subscribers and advertising revenue. We expect to continue to incur significant costs related to additional content and marketing at Peacock, with such costs increasing in 2023. Revenue and programming expenses are also impacted by the timing of certain sporting events, including the Olympics, Super Bowl and FIFA World Cup in 2022. Global economic conditions and consumer sentiment have in the past, and may continue to, adversely impact demand for our products and services and our results of operations. In addition, currency exchange rates have impacted revenue and programming and production costs at our international networks as a result of the strengthening of the U.S. dollar, relative primarily to the British pound and euro.
Our Studios segment generates revenue primarily from third parties and from licensing content to our Media segment. While results of operations for our Studios segment are not impacted, results for our total Content & Experiences business may be impacted as the Studios segment licenses content to the Media segment, including for Peacock, rather than licensing the content to third parties.
We continue to invest significantly in existing and new theme park attractions, hotels and infrastructure, including Epic Universe in Orlando, which we believe will have a positive impact on attendance and guest spending at our theme parks. Our results in prior periods were impacted by temporary restrictions and closures at our international theme parks due to COVID-19. In addition, currency exchange rates have impacted our international theme park results as a result of the strengthening of the U.S. dollar, particularly against the Japanese yen and Chinese yuan.
Media Segment Results of Operations
| Three Months Ended March 31, | Change | |||||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | 2022 | % | |||||||||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||||||||
| Domestic advertising | $ | 2,025 | $ | 3,310 | (38.8) | % | ||||||||||||||||||||||||||||||||
| Domestic distribution | 2,709 | 2,938 | (7.8) | |||||||||||||||||||||||||||||||||||
| International networks | 1,008 | 995 | 1.3 | |||||||||||||||||||||||||||||||||||
| Other | 410 | 515 | (20.5) | |||||||||||||||||||||||||||||||||||
| Total revenue | 6,152 | 7,758 | (20.7) | |||||||||||||||||||||||||||||||||||
| Costs and Expenses | ||||||||||||||||||||||||||||||||||||||
| Programming and production | 3,989 | 5,221 | (23.6) | |||||||||||||||||||||||||||||||||||
| Marketing and promotion | 305 | 426 | (28.4) | |||||||||||||||||||||||||||||||||||
| Other | 978 | 929 | 5.2 | |||||||||||||||||||||||||||||||||||
| Total costs and expenses | 5,272 | 6,577 | (19.8) | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 880 | $ | 1,181 | (25.5) | % |
Media Segment – Revenue
Revenue decreased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to our broadcasts of the Beijing Olympics and Super Bowl in the first quarter of 2022. Excluding incremental revenue associated with our broadcasts of these events, revenue decreased for the three months ended March 31, 2023 driven by declines in domestic advertising and other revenue, partially offset by an increase in domestic distribution revenue.
| Three Months Ended March 31, | Change | ||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | 2022 | % | ||||||||||||||||||||||||||||||||
| Total revenue | $ | 6,152 | $ | 7,758 | (20.7) | % | |||||||||||||||||||||||||||||
| Olympics and Super Bowl | — | 1,481 | NM | ||||||||||||||||||||||||||||||||
| Total revenue, excluding Olympics and Super Bowl | $ | 6,152 | $ | 6,276 | (2.0) | % | |||||||||||||||||||||||||||||
| Total domestic advertising revenue | $ | 2,025 | $ | 3,310 | (38.8) | % | |||||||||||||||||||||||||||||
| Olympics and Super Bowl | — | 1,154 | NM | ||||||||||||||||||||||||||||||||
| Domestic advertising revenue, excluding Olympics and Super Bowl | $ | 2,025 | $ | 2,156 | (6.1) | % | |||||||||||||||||||||||||||||
| Total domestic distribution revenue | $ | 2,709 | $ | 2,938 | (7.8) | % | |||||||||||||||||||||||||||||
| Olympics | — | 327 | NM | ||||||||||||||||||||||||||||||||
| Domestic distribution revenue, excluding Olympics | $ | 2,709 | $ | 2,611 | 3.8 | % |
Percentage changes that are considered not meaningful are denoted with NM.
Domestic advertising revenue consists of revenue generated from sales of advertising on our television networks, Peacock and other digital properties operating predominantly in the United States.
Domestic advertising revenue decreased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to our broadcasts of the Beijing Olympics and Super Bowl in the first quarter of 2022. Excluding the incremental revenue associated with our broadcasts of these events, domestic advertising revenue decreased for the three months ended March 31, 2023, primarily due to a decrease in revenue at our networks driven by continued audience ratings declines, partially offset by an increase in revenue at Peacock.
Domestic distribution revenue primarily includes revenue generated from the distribution of our television network programming for networks operating predominantly in the United States to traditional and virtual multichannel video providers, and from NBC-affiliated and Telemundo-affiliated local broadcast stations. Our revenue from distribution agreements is generally based on the number of subscribers receiving the programming and the fees charged per subscriber. Distribution revenue also includes Peacock subscription fees.
Domestic distribution revenue decreased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to our broadcast of the Beijing Olympics in the first quarter of 2022. Excluding the incremental revenue associated with our broadcast of the Beijing Olympics, domestic distribution revenue increased for the three months ended March 31, 2023 primarily due to an increase in Peacock paid subscribers, partially offset by a decrease in revenue at our networks. The decrease at our networks was primarily due to a decline in the number of subscribers, partially offset by contractual rate increases.
International networks revenue consists of revenue generated by our networks operating predominantly outside the United States, including most of the Sky Sports channels. This revenue primarily results from the distribution of network programming to multichannel video providers and other platforms, as well as sales of advertising. A significant portion of this revenue comes from the Residential Connectivity & Platforms segment.
International networks revenue increased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to an increase in revenue associated with the distribution of sports channels, partially offset by a decrease from the negative impact of foreign currency.
Other revenue consists primarily of revenue from the licensing of our owned content and technology, and revenue generated by various digital properties.
Other revenue decreased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to a decrease in content licensing.
Revenue included $685 million and $472 million related to Peacock for the three months ended March 31, 2023 and 2022, respectively. We had 22 million and 13 million paid subscribers of Peacock as of March 31, 2023 and 2022, respectively. Peacock paid subscribers represent customers from which Peacock receives a subscription fee on a retail or wholesale basis. Paid subscribers do not include certain customers that receive Peacock as part of bundled services where Peacock does not receive fees.
Media Segment – Costs and Expenses
Programming and production costs include the amortization of owned and licensed programming, including sports rights, direct production costs, production overhead, on-air talent costs and costs associated with the distribution of our programming to third-party networks and other distribution platforms.
Programming and production costs decreased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to costs associated with our broadcast of the Beijing Olympics and Super Bowl in the prior year period, partially offset by higher programming costs at Peacock. International sports programming costs remained consistent with the prior year period driven by a decrease due to the impact of foreign currency, offset by the shift of certain European football matches and the related programming expense to the first half of 2023 due to timing of the 2022 FIFA World Cup.
Marketing and promotion expenses consist primarily of the costs associated with promoting our networks, Peacock and other digital properties.
Marketing and promotion expenses decreased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to lower costs related to marketing for entertainment programming and for Peacock.
Other expenses include salaries, employee benefits, rent and other overhead expenses.
Other expenses increased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to an increase in costs related to Peacock.
Costs and expenses included $1.4 billion and $928 million related to Peacock for the three months ended March 31, 2023 and 2022, respectively.
Studios Segment Results of Operations
| Three Months Ended March 31, | Change | |||||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | 2022 | % | |||||||||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||||||||
| Content licensing | $ | 2,344 | $ | 2,429 | (3.5) | % | ||||||||||||||||||||||||||||||||
| Theatrical | 319 | 168 | 90.1 | |||||||||||||||||||||||||||||||||||
| Other | 292 | 310 | (5.6) | |||||||||||||||||||||||||||||||||||
| Total revenue | 2,956 | 2,907 | 1.7 | |||||||||||||||||||||||||||||||||||
| Costs and Expenses | ||||||||||||||||||||||||||||||||||||||
| Programming and production | 2,101 | 2,122 | (1.0) | |||||||||||||||||||||||||||||||||||
| Marketing and promotion | 397 | 327 | 21.6 | |||||||||||||||||||||||||||||||||||
| Other | 180 | 213 | (15.7) | |||||||||||||||||||||||||||||||||||
| Total costs and expenses | 2,678 | 2,662 | 0.6 | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 277 | $ | 245 | 13.3 | % |
Studios Seg****ment – Revenue
Content licensing revenue relates to the licensing of our owned film and television content in the United States and internationally to television networks and DTC streaming service providers, as well as through video on demand and pay-per-view services provided by multichannel video providers and OTT service providers.
Content licensing revenue decreased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to the timing of when content was made available by our television studios under licensing agreements, partially offset by the timing of when content was made available by our film studios.
Theatrical revenue relates to the worldwide distribution of our produced and acquired films for exhibition in movie theaters.
Theatrical revenue increased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to the strong performances of recent releases, including Puss in Boots: The Last Wish and M3GAN.
Other revenue consists primarily of the sale of physical and digital home entertainment products, as well as the production and licensing of live stage plays and the distribution of content produced by third parties.
Studios Segment – Costs and Expenses
Programming and production costs include the amortization of capitalized film and television production and acquisition costs; residuals and participations expenses; and distribution expenses. The costs associated with producing film and television content have generally increased in recent years and may continue to increase in the future.
Programming and production costs decreased for the three months ended March 31, 2023 compared to the same period in 2022 due to lower costs associated with content licensing sales, partially offset by higher costs associated with theatrical releases in the current year period.
Marketing and promotion expenses consist primarily of expenses associated with advertising for our theatrical releases.
Marketing and promotion expenses increased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to higher spending on recent and upcoming theatrical film releases in the current year period.
Other expenses include salaries, employee benefits, rent and other overhead expenses.
Theme Parks Segment Results of Operations
| Three Months Ended March 31, | Change | |||||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | 2022 | % | |||||||||||||||||||||||||||||||||||
| Revenue | $ | 1,949 | $ | 1,560 | 24.9 | % | ||||||||||||||||||||||||||||||||
| Costs and expenses | 1,291 | 1,109 | 16.4 | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 658 | $ | 451 | 46.0 | % |
Them****e parks segment revenue primarily relates to guest spending at our theme parks, including ticket sales and in-park spending and our consumer products business.
Theme parks revenue increased for the three months ended March 31, 2023 compared to the same period in 2022 driven by an increase at our international theme parks, which had COVID-19 related restrictions in the prior year period, partially offset by the negative impact of foreign currency, and an increase in our domestic theme parks primarily due to higher attendance driven by the opening of Super Nintendo World at our theme park in Hollywood in the current year period.
Theme parks segment costs and expenses consist primarily of theme park operations, including repairs and maintenance and related administrative expenses; food, beverage and merchandise costs; labor costs; and sales and marketing costs.
Theme parks costs and expenses increased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to higher costs associated with increased guest attendance.
Content & Experiences Headquarters, Other and Eliminations
Headquarters and Other Results of Operations
| Three Months Ended March 31, | Change | |||||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | 2022 | % | |||||||||||||||||||||||||||||||||||
| Revenue | $ | 19 | $ | 16 | 16.3 | % | ||||||||||||||||||||||||||||||||
| Costs and expenses | 251 | 208 | 20.9 | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | (232) | $ | (191) | (21.3) | % |
Headquarters and Other expenses include overhead, personnel costs and costs associated with corporate initiatives.
Eliminations
| Three Months Ended March 31, | Change | |||||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | 2022 | % | |||||||||||||||||||||||||||||||||||
| Revenue | $ | (817) | $ | (901) | (9.4) | % | ||||||||||||||||||||||||||||||||
| Costs and expenses | (841) | (839) | 0.3 | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 24 | $ | (62) | NM |
Percentage changes that are considered not meaningful are denoted with NM.
Amounts represent eliminations of transactions between segments in our Content & Experiences business, the most significant being content licensing between the Studios and Media segments, which are affected by the timing of recognition of content licenses.
Eliminations increase or decrease to the extent that additional content is made available to our other segments. Refer to Note 2 for additional information on transactions between our segments.
Corporate, Other and Eliminations
Corporate and Other Results of Operations
| Three Months Ended March 31, | Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | 2022 | % | ||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 707 | $ | 713 | (0.9) | % | |||||||||||||||||||||||||||||||||||
| Costs and expenses | 995 | 948 | 5.0 | ||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | (288) | $ | (235) | (22.9) | % |
Corporate and Other primarily includes overhead and personnel costs; Sky operations outside of the Connectivity & Platforms markets; Comcast Spectacor, which owns the Philadelphia Flyers and the Wells Fargo Center arena in Philadelphia, Pennsylvania; and Xumo, our consolidated streaming platform joint venture beginning in June 2022.
Corporate and Other revenue for the three months ended March 31, 2023 remained consistent with the same period in 2022. Corporate and Other expenses increased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to costs related to Xumo. We expect to continue to incur increased costs in 2023 related to Xumo.
Eliminations
| Three Months Ended March 31, | Change | |||||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | 2022 | % | |||||||||||||||||||||||||||||||||||
| Revenue | $ | (1,427) | $ | (1,554) | (8.2) | % | ||||||||||||||||||||||||||||||||
| Costs and expenses | (1,430) | (1,472) | (2.8) | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 3 | $ | (82) | NM |
Percentage changes that are considered not meaningful are denoted with NM.
Amounts represent eliminations of transactions between our Connectivity & Platforms, Content & Experiences and other businesses, the most significant being distribution of television network programming between the Media and Residential Connectivity & Platforms segments. Eliminations of transactions between segments within Content & Experiences are presented separately. Amounts in the prior year reflect increased eliminations associated with the Beijing Olympics in the first quarter of 2022. Refer to Note 2 for additional information on transactions between our segments.
Non-GAAP Financial Measures
Consolidated Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure and is the primary basis used to measure the operational strength and performance of our businesses as well as to assist in the evaluation of underlying trends in our businesses. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of certain of our businesses and from intangible assets recognized in business combinations. It is also unaffected by our capital and tax structures, and by our investment activities, including the results of entities that we do not consolidate, as our management excludes these results when evaluating our operating performance. Our management and Board of Directors use this financial measure to evaluate our consolidated operating performance and the operating performance of our operating segments and to allocate resources and capital to our operating segments. It is also a significant performance measure in our annual incentive compensation programs. Additionally, we believe that Adjusted EBITDA is useful to investors because it is one of the bases for comparing our operating performance with that of other companies in our industries, although our measure of Adjusted EBITDA may not be directly comparable to similar measures used by other companies.
We define Adjusted EBITDA as net income attributable to Comcast Corporation before net income (loss) attributable to noncontrolling interests, income tax expense, investment and other income (loss), net, interest expense, depreciation and amortization expense, and other operating gains and losses (such as 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 certain events, gains, losses or other charges (such as significant legal settlements) that affect the period-to-period comparability of our operating performance.
We reconcile consolidated Adjusted EBITDA to net income attributable to Comcast Corporation. This measure should not be considered a substitute for operating income (loss), net income (loss), net income (loss) attributable to Comcast Corporation, or net cash provided by operating activities that we have reported in accordance with GAAP.
Reconciliation from Net Income Attributable to Comcast Corporation to Adjusted EBITDA
| Three Months Ended March 31, | |||||||||||||||||||||||
| (in millions) | 2023 | 2022 | |||||||||||||||||||||
| Net income (loss) attributable to Comcast Corporation | $ | 3,834 | $ | 3,549 | |||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | (67) | (73) | |||||||||||||||||||||
| Income tax expense | 1,476 | 1,288 | |||||||||||||||||||||
| Interest expense | 1,010 | 993 | |||||||||||||||||||||
| Investment and other (income) loss, net | (607) | (188) | |||||||||||||||||||||
| Depreciation | 2,264 | 2,213 | |||||||||||||||||||||
| Amortization | 1,513 | 1,335 | |||||||||||||||||||||
| Adjustments(a) | (8) | 33 | |||||||||||||||||||||
| Adjusted EBITDA | $ | 9,415 | $ | 9,150 |
(a)Amounts represent the impact of certain events, gains, losses or other charges that are excluded from Adjusted EBITDA, including costs related to our investment portfolio.
Constant Currency
Constant currency and constant currency growth rates are non-GAAP financial measures that present our results of operations excluding the estimated effects of foreign currency exchange rate fluctuations. Certain of our businesses, including Connectivity & Platforms, have operations outside the United States that are conducted in local currencies. As a result, the comparability of the financial results reported in U.S. dollars is affected by changes in foreign currency exchange rates. In our Connectivity & Platforms business, we use constant currency and constant currency growth rates to evaluate the underlying performance of the businesses, and we believe they are helpful for investors because such measures present operating results on a comparable basis year over year to evaluate their underlying performance.
Constant currency and constant currency growth rates are calculated by comparing the results for each comparable prior year period adjusted to reflect the average exchange rates from each current year period presented, rather than the actual exchange rates that were in effect during the respective periods.
Reconciliation of Connectivity & Platforms Constant Currency
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
| (in millions, except per customer data) | As Reported | Effects of Foreign Currency | Constant Currency Amounts | ||||||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||||||||
| Residential Connectivity & Platforms | $ | 18,340 | $ | (347) | $ | 17,993 | |||||||||||||||||||||||||||||||||||
| Business Services Connectivity | 2,172 | (1) | 2,171 | ||||||||||||||||||||||||||||||||||||||
| Total Connectivity & Platforms revenue | $ | 20,512 | $ | (349) | $ | 20,163 | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | |||||||||||||||||||||||||||||||||||||||||
| Residential Connectivity & Platforms | $ | 6,611 | $ | (58) | $ | 6,553 | |||||||||||||||||||||||||||||||||||
| Business Services Connectivity | 1,233 | 1 | 1,234 | ||||||||||||||||||||||||||||||||||||||
| Total Connectivity & Platforms Adjusted EBITDA | $ | 7,844 | $ | (57) | $ | 7,787 | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA Margin | |||||||||||||||||||||||||||||||||||||||||
| Residential Connectivity & Platforms | 36.0 | % | 40 bps | 36.4 | % | ||||||||||||||||||||||||||||||||||||
| Business Services Connectivity | 56.8 | - bps | 56.8 | ||||||||||||||||||||||||||||||||||||||
| Total Connectivity & Platforms Adjusted EBITDA margin | 38.2 | % | 40 bps | 38.6 | % |
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
| (in millions, except per customer data) | As Reported | Effects of Foreign Currency | Constant Currency Amounts | ||||||||||||||||||||||||||||||||||||||
| Average monthly total Connectivity & Platforms revenue per customer relationship | $ | 130.35 | $ | (2.21) | $ | 128.14 | |||||||||||||||||||||||||||||||||||
| Average monthly total Connectivity & Platforms Adjusted EBITDA per customer relationship | $ | 49.85 | $ | (0.37) | $ | 49.48 |
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
| (in millions, except per customer data) | As Reported | Effects of Foreign Currency | Constant Currency Amounts | ||||||||||||||||||||||||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||||||||||||||||||||
| Programming | $ | 4,884 | $ | (103) | $ | 4,781 | |||||||||||||||||||||||||||||||||||
| Technical and support | 1,949 | (27) | 1,922 | ||||||||||||||||||||||||||||||||||||||
| Direct product costs | 1,339 | (68) | 1,271 | ||||||||||||||||||||||||||||||||||||||
| Marketing and promotion | 1,332 | (26) | 1,306 | ||||||||||||||||||||||||||||||||||||||
| Customer service | 736 | (14) | 722 | ||||||||||||||||||||||||||||||||||||||
| Other | 2,429 | (53) | 2,376 | ||||||||||||||||||||||||||||||||||||||
| Total Connectivity & Platforms costs and expenses | $ | 12,668 | $ | (291) | $ | 12,377 |
Reconciliation of Residential Connectivity & Platforms Constant Currency
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
| (in millions, except per customer data) | As Reported | Effects of Foreign Currency | Constant Currency Amounts | ||||||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||||||||
| Domestic broadband | $ | 6,050 | $ | — | $ | 6,050 | |||||||||||||||||||||||||||||||||||
| Domestic wireless | 677 | — | 677 | ||||||||||||||||||||||||||||||||||||||
| International connectivity | 840 | (78) | 762 | ||||||||||||||||||||||||||||||||||||||
| Total residential connectivity | 7,568 | (78) | 7,489 | ||||||||||||||||||||||||||||||||||||||
| Video | 8,002 | (191) | 7,811 | ||||||||||||||||||||||||||||||||||||||
| Advertising | 1,073 | (35) | 1,038 | ||||||||||||||||||||||||||||||||||||||
| Other | 1,698 | (43) | 1,655 | ||||||||||||||||||||||||||||||||||||||
| Total revenue | 18,340 | (347) | 17,993 | ||||||||||||||||||||||||||||||||||||||
| Costs and Expenses | |||||||||||||||||||||||||||||||||||||||||
| Programming | 4,884 | (103) | 4,781 | ||||||||||||||||||||||||||||||||||||||
| Other | 6,846 | (187) | 6,659 | ||||||||||||||||||||||||||||||||||||||
| Total costs and expenses | 11,729 | (289) | 11,440 | ||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 6,611 | $ | (58) | $ | 6,553 |
Other Adjustments
From time to time, we present adjusted information, such as revenue, to exclude the impact of certain events, gains, losses or other charges. This adjusted information is a non-GAAP financial measure. We believe, among other things, that the adjusted information may help investors evaluate our ongoing operations and can assist in making meaningful period-over-period comparisons.
Liquidity and Capital Resources
| Three Months Ended March 31, | |||||||||||||||||
| (in billions) | 2023 | 2022 | |||||||||||||||
| Cash provided by operating activities | $ | 7.2 | $ | 7.3 | |||||||||||||
| Cash used in investing activities | $ | (3.4) | $ | (2.6) | |||||||||||||
| Cash used in financing activities | $ | (3.1) | $ | (4.5) |
| (in billions) | March 31, 2023 | December 31, 2022 | |||||||||
| Cash and cash equivalents | $ | 5.5 | $ | 4.7 | |||||||
| Short-term and long-term debt | $ | 95.5 | $ | 94.8 |
Our businesses generate significant cash flows from operating activities. We believe that we will be able to continue to meet our current and long-term liquidity and capital requirements, including fixed charges, through our cash flows from operating activities; existing cash, cash equivalents and investments; available borrowings under our existing credit facility; and our ability to obtain future external financing. We anticipate that we will continue to use a substantial portion of our cash flows from operating activities in repaying our debt obligations, funding our capital expenditures and cash paid for intangible assets, investing in business opportunities, and returning capital to shareholders.
We maintain significant availability under our revolving credit facility and our commercial paper program to meet our short-term liquidity requirements. Our commercial paper program generally provides a lower-cost source of borrowing to fund our short-term working capital requirements. As of March 31, 2023, amounts available under our revolving credit facility, net of amounts outstanding under our commercial paper program and outstanding letters of credit and bank guarantees, totaled $11.0 billion.
Operating Activit****ies
Components of Net Cash Provided by Operating Activities
| Three Months Ended March 31, | |||||||||||
| (in millions) | 2023 | 2022 | |||||||||
| Operating income | $ | 5,646 | $ | 5,569 | |||||||
| Depreciation and amortization | 3,777 | 3,548 | |||||||||
| Noncash share-based compensation | 359 | 376 | |||||||||
| Changes in operating assets and liabilities | (1,731) | (1,475) | |||||||||
| Payments of interest | (766) | (747) | |||||||||
| Payments of income taxes | (148) | (90) | |||||||||
| Proceeds from investments and other | 91 | 75 | |||||||||
| Net cash provided by operating activities | $ | 7,228 | $ | 7,257 |
The variance in changes in operating assets and liabilities for the three months ended March 31, 2023 compared to the same period in 2022 was primarily related to the timing of sporting events, including the Beijing Olympics and Super Bowl in the prior year period, and the 2022 FIFA World Cup, which impacted the timing of collections on receivables, recognition of deferred revenue and amortization, and related payments for our film and television costs.
Investing Activities
Net cash used in investing activities increased for the three months ended March 31, 2023 compared to the same period in 2022, primarily due to increased capital expenditures, increased cash paid for intangible assets related to software development and increased purchases of investments in the current year period. These increases were partially offset by proceeds from the maturity of short-term investments and decreased cash paid related to the construction of Universal Beijing Resort in the current year period. Capital expenditures, which are our most significant recurring investing activity, increased for the three months ended March 31, 2023 compared to the same period in 2022, primarily reflecting increased spending on scalable infrastructure and line extensions by the Connectivity & Platforms businesses and increased spending on the development of the Epic Universe theme park in Orlando.
Financing Activities
Net cash used in financing activities decreased for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to a decrease in the repurchases of common stock under our share repurchase program and employee plans, and higher proceeds from borrowings in the current year period, partially offset by repayments of short-term borrowings in the current year period.
In February 2023, we issued $1.0 billion aggregate principal amount of fixed-rate senior notes maturing in 2033. An amount equal to the net proceeds from these notes is intended to finance or refinance one or more green projects, assets or activities that meet certain specified eligibility criteria.
We have made, and may from time to time in the future make, optional repayments on our debt obligations, which may include repurchases or exchanges of our outstanding public notes and debentures, depending on various factors, such as market conditions. Any such repurchases may be effected through privately negotiated transactions, market transactions, tender offers, redemptions or otherwise. See Notes 5 and 7 for additional information on our financing activities.
Share Repurchases and Dividends
During the three months ended March 31, 2023, we repurchased a total of 52.5 million shares of our Class A common stock for $2.0 billion. As of March 31, 2023, we had $14.0 billion remaining under our existing share repurchase program. Under this authorization, which does not have an expiration date, we expect to repurchase additional shares of our Class A common stock in the open market or in private transactions, subject to market and other conditions.
In addition, we paid $177 million for the three months ended March 31, 2023 related to employee taxes associated with the administration of our share-based compensation plans.
In January 2023, we paid dividends of $1.2 billion. and our Board of Directors approved an 7.4% increase in our dividend to $1.16 per share on an annualized basis and approved our first quarter dividend of $0.29 per share, which was paid in April 2023. We expect to continue to pay quarterly dividends, although each dividend is subject to approval by our Board of Directors.
Guarantee Structure
Our debt is primarily issued at Comcast, although we also have debt at certain of our subsidiaries as a result of acquisitions and other issuances. A substantial amount of this debt is subject to guarantees by Comcast and by certain subsidiaries that we have put in place to simplify our capital structure. We believe this guarantee structure provides liquidity benefits to debt investors and helps to simplify credit analysis with respect to relative value considerations of guaranteed subsidiary debt.
Debt and Guarantee Structure
| (in billions) | March 31, 2023 | December 31, 2022 | ||||||
| Debt Subject to Cross-Guarantees | ||||||||
| Comcast | $ | 88.9 | $ | 88.4 | ||||
| Comcast Cable(a) | 0.9 | 0.9 | ||||||
| NBCUniversal(a) | 1.6 | 1.6 | ||||||
| 91.4 | 90.9 | |||||||
| Debt Subject to One-Way Guarantees | ||||||||
| Sky | 5.3 | 5.2 | ||||||
| Other(a) | 0.1 | 0.1 | ||||||
| 5.4 | 5.3 | |||||||
| Debt Not Guaranteed | ||||||||
| Universal Beijing Resort(b) | 3.6 | 3.5 | ||||||
| Other | 1.3 | 1.3 | ||||||
| 4.9 | 4.8 | |||||||
| Debt issuance costs, premiums, discounts, fair value adjustments for acquisition accounting and hedged positions, net | (6.1) | (6.2) | ||||||
| Total debt | $ | 95.5 | $ | 94.8 | ||||
(a)NBCUniversal Media, LLC (“NBCUniversal”), Comcast Cable Communications, LLC (“Comcast Cable”) and Comcast Holdings Corporation (“Comcast Holdings”), which is included within other debt subject to one-way guarantees, are each consolidated subsidiaries subject to the periodic reporting requirements of the SEC. The guarantee structures and related disclosures in this section, together with Exhibit 22, satisfy these reporting obligations.
(b)Universal Beijing Resort debt financing is secured by the assets of Universal Beijing Resort and the equity interests of the investors. See Note 6 for additional information.
Cross-Guarantees
Comcast, NBCUniversal and Comcast Cable (the “Guarantors”) fully and unconditionally, jointly and severally, guarantee each other’s debt securities. NBCUniversal and Comcast Cable also guarantee other borrowings of Comcast, including its revolving credit facility. These guarantees rank equally with all other general unsecured and unsubordinated obligations of the respective Guarantors. However, the obligations of the Guarantors under the guarantees are structurally subordinated to the indebtedness and other liabilities of their respective non-guarantor subsidiaries. The obligations of each Guarantor are limited to the maximum amount that would not render such Guarantor’s obligations subject to avoidance under applicable fraudulent conveyance provisions of U.S. and non-U.S. law. Each Guarantor’s obligations will remain in effect until all amounts payable with respect to the guaranteed securities have been paid in full. However, a guarantee by NBCUniversal or Comcast Cable of Comcast’s debt securities, or by NBCUniversal of Comcast Cable’s debt securities, will terminate upon a disposition of such Guarantor entity or all or substantially all of its assets.
The Guarantors are each holding companies that principally hold investments in, borrow from and lend to non-guarantor subsidiary operating companies; issue and service third-party debt obligations; repurchase shares and pay dividends; and engage in certain corporate and headquarters activities. The Guarantors are generally dependent on non-guarantor subsidiary operating companies to fund these activities.
As of March 31, 2023 and December 31, 2022, the combined Guarantors have noncurrent notes payable to non-guarantor subsidiaries of $130 billion and $128 billion, respectively, and noncurrent notes receivable from non-guarantor subsidiaries of $18 billion and $30 billion, respectively. This financial information is that of the Guarantors presented on a combined basis with intercompany balances between the Guarantors eliminated. The combined financial information excludes financial information of non-guarantor subsidiaries. The underlying net assets of the non-guarantor subsidiaries are significantly in excess of the Guarantor obligations. Excluding investments in non-guarantor subsidiaries, external debt and the noncurrent notes payable and receivable with non-guarantor subsidiaries, the Guarantors do not have material assets, liabilities or results of operations.
One-Way Guarantees
Comcast provides full and unconditional guarantees of certain debt issued by Sky Limited (“Sky”), including all of its senior notes, and other consolidated subsidiaries not subject to the periodic reporting requirements of the SEC.
Comcast also provides a full and unconditional guarantee of $138 million principal amount of subordinated debt issued by Comcast Holdings. Comcast’s obligations under this guarantee are subordinated and subject, in right of payment, to the prior payment in full of all of Comcast’s senior indebtedness, including debt guaranteed by Comcast on a senior basis, and are structurally subordinated to the indebtedness and other liabilities of its non-guarantor subsidiaries (for purposes of this Comcast Holdings discussion, Comcast Cable and NBCUniversal are included within the non-guarantor subsidiary group). Comcast’s obligations as guarantor will remain in effect until all amounts payable with respect to the guaranteed debt have been paid in full. However, the guarantee will terminate upon a disposition of Comcast Holdings or all or substantially all of its assets. Comcast Holdings is a consolidated subsidiary holding company that directly or indirectly holds 100% and approximately 37% of our equity interests in Comcast Cable and NBCUniversal, respectively.
As of March 31, 2023 and December 31, 2022, Comcast and Comcast Holdings, the combined issuer and guarantor of the guaranteed subordinated debt, have noncurrent senior notes payable to non-guarantor subsidiaries of $99 billion and $97 billion, respectively, and noncurrent notes receivable from non-guarantor subsidiaries of $16 billion and $28 billion, respectively. This financial information is that of Comcast and Comcast Holdings presented on a combined basis with intercompany balances between Comcast and Comcast Holdings eliminated. The combined financial information excludes financial information of non-guarantor subsidiaries of Comcast and Comcast Holdings. The underlying net assets of the non-guarantor subsidiaries of Comcast and Comcast Holdings are significantly in excess of the obligations of Comcast and Comcast Holdings. Excluding investments in non-guarantor subsidiaries, external debt, and the noncurrent notes payable and receivable with non-guarantor subsidiaries, Comcast and Comcast Holdings do not have material assets, liabilities or results of operations.
Critical Accounting Judgments and Estimates
The preparation of our condensed consolidated financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and contingent liabilities. We base our judgments on our historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making estimates about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Following the change in presentation of our segment operating results in the first quarter of 2023, we reassessed our reporting units related to goodwill and concluded that our reporting units are the same as our reportable business segments. See Note 2 for additional information.
We believe our judgments and related estimates associated with the valuation and impairment testing of goodwill are critical in the preparation of our consolidated financial statements. We assessed goodwill for impairment in connection with our change in segment presentation in the first quarter of 2023. Based on our assessment, no impairment was required, and the estimated fair values of our new reporting units substantially exceeded their carrying values.
For a more complete discussion of the accounting judgments and estimates that we have identified as critical in the preparation of our condensed consolidated financial statements, please refer to our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K.
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