COMCAST CORP (CMCSA) FY 2023 MD&A

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

Management’s discussion and analysis of financial condition and results of operations is provided as a supplement to, and should be read in conjunction with, the consolidated financial statements and related notes (“Notes”) to enhance the understanding of our operations and our present business environment. For more information about our company’s operations and the risks facing our businesses, see Item 1: Business and Item 1A: Risk Factors, respectively. As discussed in Note 2, we changed the presentation of our segment operating results in 2023, and all amounts are presented under the new segment structure. Refer to Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K for management’s discussion and analysis of our consolidated financial condition and results of operations for fiscal year 2022 compared to fiscal year 2021. The discussion and analysis related to our segment operating results and Corporate, Other and Eliminations are included below for all periods based on the new segment structure.

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.

(a)Adjusted EBITDA is a financial measure that is not defined by generally accepted accounting principles in the United States (“GAAP”). Refer to the “Non-GAAP Financial Measures” section on page 47 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. Revenue, Net Income Attributable to Comcast Corporation and Adjusted EBITDA charts are not presented on the same scale.

2023 Revenue and Adjusted EBITDA Segment Contribution(a)

(a)Charts exclude the results of Content & Experiences Headquarters and Other, Corporate and Other, and eliminations. Refer to our Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.

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2023 Developments

(a) Revenue and Adjusted EBITDA charts are not presented on the same scale.

(b) Segment details in the charts exclude the results of Content & Experiences Headquarters and Other and Eliminations and therefore the amounts do not equal the total.

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Other

•Repurchased a total of 262 million shares of our Class A common stock for $11.0 billion in 2023 compared to a total of 332 million shares of our Class A common stock for $13.0 billion in 2022. Raised our dividend by $0.08 to $1.16 per share on an annualized basis in January 2023 and paid $4.8 billion of dividends in 2023.

•Exercised the put right to sell our 33% interest in Hulu in the fourth quarter of 2023 and received $8.6 billion of net pre-tax proceeds relating to the minimum equity value, net of capital calls. A portion of these proceeds was used to repay our $5.2 billion collateralized obligation. Additional proceeds for any excess of the fair value of our interest over the minimum equity value will be due following the final determination of Hulu’s fair value pursuant to a third-party appraisal process. See Note 8.

Consolidated Operating Results

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 47 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 change in consolidated revenue made by our Connectivity & Platforms and Content & Experiences businesses, as well as by Corporate and Other activities, including eliminations.

(a) Graph is presented using a truncated scale.

Revenue for our segments and other businesses is discussed separately below under the heading “Segment Operating Results.”

Consolidated Costs and Expenses

The following graph illustrates the contributions to the change in consolidated costs and expenses, excluding depreciation expense, amortization expense, and goodwill and long-lived asset impairments, made by our Connectivity & Platforms and Content & Experiences businesses, as well as by Corporate and Other activities, including adjustments and eliminations.

(a) Graph is presented using a truncated scale.

Costs and expenses for our segments and our corporate operations and other businesses are discussed separately below under the heading “Segment Operating Results.”

Consolidated depreciation and amortization expense increased in 2023 compared to 2022 primarily due to increases in the amortization of software and theme park depreciation.

Amortization expense from acquisition-related intangible assets totaled $2.3 billion and $2.2 billion in 2023 and 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.

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Consolidated goodwill and long-lived asset impairments included charges related to Sky totaling $8.6 billion in 2022 recognized in connection with our annual impairment assessment. The impairments primarily reflected an increased discount rate and reduced estimated future cash flows as a result of macroeconomic conditions. See “Critical Accounting Estimates” and Note 10 for further discussion.

Consolidated interest expense increased in 2023 compared to 2022 primarily due to an increase in average debt outstanding and higher weighted-average interest rates, partially offset by increased capitalized interest.

Consolidated investment and other income (loss), net increased in 2023 compared to 2022.

The change in equity in net income (losses) of investees, net in 2023 compared to 2022 was primarily due to our investment in Atairos. The income (losses) at Atairos were driven by fair value adjustments on its underlying investments with income (loss) of $1.1 billion and $(434) million in 2023 and 2022, respectively. The change in realized and unrealized gains (losses) on equity securities, net in 2023 compared to 2022 was primarily due to losses on marketable securities in the prior year, partially offset by losses on nonmarketable securities in the current year. The change in other income (loss), net in 2023 compared to 2022 primarily resulted from gains on foreign exchange remeasurement compared to losses in the prior year, gains on insurance contracts compared to losses in the prior year, and increased interest income.

Consolidated Income Tax Expense

Our effective income tax rate in 2023 and 2022 was 26.2% and 47.0%, respectively. Our effective income tax rate for 2022 was impacted by the goodwill impairment, which was primarily not deductible for tax purposes. See Note 5 for additional information on our effective income tax rate.

The increase in income tax expense in 2023 was primarily driven by higher income before income taxes and the effect of a change in our net deferred tax liabilities as a result of the enactment of state tax law changes, which resulted in a $286 million benefit in the prior year.

Consolidated Net Income (Loss) Attributable to Noncontrolling Interests

The changes in net income (loss) attributable to noncontrolling interests in 2023 compared to 2022 was primarily due to decreases in losses at Universal Beijing Resort (see Note 8), partially offset by increases in losses in our Xumo streaming platform joint venture in the current year.

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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 segments.

Connectivity & Platforms Overview

(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 higher-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 47 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. An increasingly competitive environment and continued low domestic household move levels have had negative impacts on our customer relationships additions/(losses). 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 mitigate the impact of continued rate increases on programming expenses. We also expect continued declines in other revenue related to declines in wireline voice revenue. We believe our Business Services Connectivity segment will continue to grow by offering competitive services, including to medium-sized and enterprise customers. 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.

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Connectivity & Platforms Customer Metrics

(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 United Kingdom and Italy. 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 in Germany now included in Corporate and Other. 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 network in the United States, as well as locations outside of our network both in the United States and internationally. Certain arrangements whereby third parties provide connectivity services leveraging our network 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 and 2021 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 resulted in increases of 161,000 and 175,000 relationships as of December 31, 2021 and 2022, respectively. These changes in methodology were not material to any period presented.

(e)Connectivity & Platforms domestic homes and businesses are considered passed if we can connect them to our network in the United States without further extending the transmission lines. Homes and businesses passed is an estimate based on the best available information.

(f)Penetration is calculated by dividing the number of domestic customers located within our network by the number of domestic homes and businesses passed.

(a)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measure’ section on page 47 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.

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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 our HFC 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.

(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 networks, including amortization of licensed content.

(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 47 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

(a)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section on page 47 for additional information, including our definition and our use of constant currency, and for a reconciliation of constant currency amounts.

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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 Xumo Stream Boxes and commission revenue from the sale of certain DTC streaming services.

Domestic broadband revenue increased in 2023 and 2022 primarily due to an increase in average rates. The increase in 2022 also includes an increase in the number of residential broadband customers.

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 in 2023 and 2022 primarily due to an increase in the number of customer lines. Wireless devices sales were consistent in 2023 compared to 2022 and increased in 2022 compared to 2021.

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 United Kingdom and Italy, as well as commission revenue from the sale of certain third-party DTC streaming services.

International connectivity revenue increased in 2023 and 2022 primarily due to increases in broadband and in wireless revenue resulting from increases in the sale of wireless devices and wireless services. International connectivity revenue included the negative impact of foreign currency in 2022.

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 revenue 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 in 2023 and 2022 primarily due to declines in the overall number of residential video customers, partially offset by an overall increase in average rates. The decrease in 2022 includes the negative impact of foreign currency.

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 cable networks in the United States, and advertising on Sky-branded entertainment television networks and on our digital properties. Advertising also includes revenue where we represent the sales efforts of third parties and from our advanced advertising businesses.

Advertising revenue decreased in 2023 primarily due to a decline in domestic political advertising and overall market weakness compared to the prior year.

Advertising revenue increased in 2022 primarily due to increases in domestic political advertising and revenue from our advanced advertising business, partially offset by the negative impact of foreign currency and lower local and national advertising revenue.

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 certain of our Sky-branded entertainment television networks to third-party video service providers; commissions from electronic retailing networks; and certain billing and collection fees.

Other revenue decreased in 2023 and 2022 primarily due to decreases in residential wireline voice revenue driven by declines in the number of customers. The decrease in 2022 includes the negative impact of foreign currency.

Residential Connectivity & Platforms Segment – Costs and Expenses

Programming expenses decreased in 2023 primarily due to a decline in the number of domestic video subscribers, partially offset by domestic contractual rate increases and an increase in programming expenses for international sports channels.

Programming expenses decreased in 2022 primarily due to a decline in the number of domestic video subscribers, a decrease in programming expenses for international sports channels and the impact of foreign currency, partially offset by domestic contractual rate increases.

Other expenses decreased in 2023 primarily due to decreased spending on marketing and promotion, lower technical and support costs, lower severance charges in 2023 compared to 2022 and a decrease in fees paid to third-party channels relating to advertising sales, partially offset by increased direct product costs associated with our wireless services resulting from increases in device sales and the number of customers receiving our services.

Other expenses increased in 2022 primarily due to increased direct product costs, severance charges in 2022 and lower levels of bad debt expense in 2021, partially offset by the impact of foreign currency, decreased franchise and other regulatory fees, and decreased customer service expenses.

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Business Services Connectivity Segment Results of Operations

Business services connectivity revenue primarily consists of revenue from our service offerings for small business locations in the United States, which include broadband, wireline voice and wireless services, as well as our service offerings for medium-sized customers and larger enterprises, and our small business connectivity service offerings in the United Kingdom.

Business services connectivity revenue increased in 2023 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 revenue increased in 2022 primarily due to an increase in revenue from medium-sized and enterprise customers, primarily due to the acquisition of Masergy in October 2021, and an increase in revenue from small business customers, driven by an increase in average rates and customer relationships compared to 2021.

Business services connectivity costs and expenses increased in 2023 primarily due to increases in direct product costs, higher severance in 2023 compared to 2022, increased spending on marketing and promotion, higher technical and support expenses, and higher customer service expenses.

Business services connectivity costs and expenses increased in 2022 primarily due to an increase in direct product costs, an increase in technical and support expenses driven by the acquisition of Masergy in October 2021, and increased spending on marketing and promotion.

Content & Experiences Overview

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 television 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 paid subscribers and advertising revenue at Peacock. We expect to continue to incur significant costs related to additional content and marketing at Peacock. 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.

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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. The Writers Guild of America and the SAG work stoppages from May to September 2023 and July to November 2023, respectively, paused productions, which primarily resulted in reduced content licensing revenue at our Studios segment and reduced programming and production costs at both our Studios and Media segments.

We continue to invest significantly in existing and new theme park attractions, hotels and infrastructure, including Epic Universe in Orlando, as well as in new destinations and experiences, 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.

Media Segment Results of Operations

Media Segment – Revenue

Revenue decreased in 2023 primarily due to our broadcasts of the Beijing Olympics, Super Bowl and FIFA World Cup in 2022. Excluding incremental revenue associated with our broadcasts of these events, revenue increased in 2023 driven by increases in domestic distribution and international networks revenue, partially offset by decreases in domestic advertising and other revenue.

Revenue decreased in 2022 due to our broadcast of the Tokyo Olympics in 2021, which more than offset the impact of our broadcasts of the Beijing Olympics, Super Bowl and FIFA World Cup in 2022. Excluding incremental revenue associated with the broadcast of these events, revenue decreased in 2022 primarily due to a decline in international networks revenue, partially offset by an increase in domestic distribution revenue.

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

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Domestic advertising revenue consists of revenue generated from sales of advertising on our linear television networks, Peacock and other digital properties operating predominantly in the United States.

Domestic advertising revenue decreased in 2023 primarily due to our broadcasts of the Beijing Olympics, Super Bowl and FIFA World Cup in 2022. Excluding incremental revenue associated with the broadcasts of these events in 2022, domestic advertising revenue decreased in 2023 primarily due to a decrease in revenue at our networks, partially offset by an increase in revenue at Peacock.

Domestic advertising revenue increased in 2022, including the impacts of our broadcasts of the Beijing Olympics, Super Bowl and FIFA World Cup in 2022, partially offset by our broadcast of the Tokyo Olympics in 2021. Excluding incremental revenue associated with the broadcasts of these events in 2022 and 2021, domestic advertising in 2022 remained consistent with 2021 primarily due to increased revenue at Peacock, offset by a decrease in revenue at our networks. The decreases at our networks were primarily due to continued audience ratings declines and the impact of additional sporting events in 2021, partially offset by higher pricing in 2022 and increased political advertising.

Domestic distribution revenue primarily includes revenue generated from the distribution of our television networks operating predominantly in the United States to traditional and virtual multichannel video providers, and from NBC-affiliated and Telemundo-affiliated local broadcast television stations. Our revenue from distribution agreements is generally based on the number of subscribers receiving the programming on our television networks and a per subscriber fee. Distribution revenue also includes Peacock subscription fees.

Domestic distribution revenue increased in 2023, including the impacts of our broadcast of the Beijing Olympics in 2022. Excluding incremental revenue associated with our broadcast of the Beijing Olympics in 2022, domestic distribution revenue increased primarily due to an increase in Peacock paid subscribers, partially offset by a decrease in revenue at our networks. The decrease in revenue at our networks was primarily due to a decline in the number of subscribers, partially offset by contractual rate increases.

Domestic distribution revenue increased in 2022, including the impacts of our broadcast of the Beijing Olympics in 2022, offset by our broadcast of the Tokyo Olympics in 2021. Excluding incremental revenue associated with the broadcasts of these events in 2022 and 2021, domestic distribution revenue increased in 2022 primarily due to increased revenue at Peacock. Distribution revenue at our networks in 2022 remained consistent with 2021 due to contractual rates increases, offset by a decline in the number of subscribers.

International networks revenue consists of revenue generated by our networks operating predominantly outside the United States, including the Sky Sports networks in the United Kingdom and Italy. This revenue primarily results from the distribution of our television networks to traditional and virtual 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 in 2023 primarily due to an increase in revenue associated with the distribution of sports networks.

International networks revenue decreased in 2022 primarily due to a decrease in revenue associated with the distribution of sports networks, including the impact of our reduced broadcast rights for Serie A in Italy, and the negative impact of foreign currency.

Other revenue consists primarily of revenue generated from the licensing of our owned content and technology and from various digital properties.

Other revenue decreased in 2023 primarily due to a decrease in content licensing revenue, partially offset by an increase in revenue from licensing our technology.

Other revenue in 2022 was consistent with 2021.

* * *

Media segment total revenue included $3.4 billion, $2.1 billion and $778 million related to Peacock in 2023, 2022 and 2021, respectively. We had 31 million, 21 million and 9 million paid subscribers of Peacock as of 2023, 2022 and 2021, 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.

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Media Segment – Costs and Expenses

Programming and production costs include the amortization of owned and licensed content, including sports rights, direct production costs, production overhead, on-air talent costs and costs associated with the distribution of our television networks to multichannel video providers.

Programming and production costs decreased in 2023 primarily due to costs associated with our broadcasts of the Beijing Olympics, Super Bowl and FIFA World Cup in 2022 and a decrease in content costs for our entertainment television networks, including the impact of the Writers Guild and SAG work stoppages in the current year, partially offset by higher programming costs at Peacock and an increase in other domestic and international sports programming costs. The increase in international sports programming costs includes the impact of the timing of recognition of costs related to the 2022 FIFA World Cup, which resulted in a shift of certain European football matches and the related programming expenses from the fourth quarter of 2022 primarily into the first half of 2023.

Programming and production costs increased in 2022 primarily due to higher programming costs at Peacock and costs associated with our broadcasts of the Beijing Olympics, Super Bowl, and FIFA World Cup in 2022, partially offset by costs associated with our broadcast of the Tokyo Olympics in 2021 and a decrease in international sports programming costs. The decrease in international sports programming costs in 2022 primarily reflected lower costs associated with Serie A in Italy as a result of reduced broadcast rights, the timing of recognition of costs related to sporting events and the impact of foreign currency. The timing impacts included the delayed start of 2020-21 European football seasons due to COVID-19 and the shifting of certain European football matches from the fourth quarter of 2022 primarily into the first half of 2023 due to the 2022 FIFA World Cup.

Marketing and promotion expenses consist primarily of the costs associated with promoting our television networks, Peacock and other digital properties.

Marketing and promotion expenses decreased in 2023 primarily due to lower costs related to marketing for entertainment programming.

Marketing and promotion expenses increased in 2022 primarily due to higher marketing costs related to Peacock.

Other expenses include salaries, employee benefits, rent and other overhead expenses.

Other expenses increased in 2023 and 2022 primarily due to increases in costs related to Peacock.

* * *

Media segment total costs and expenses included $6.1 billion, $4.6 billion and $2.5 billion related to Peacock in 2023, 2022 and 2021, respectively.

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Studios Segment Results of Operations

Studios Segment – 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 in 2023 primarily due to the timing of when content was made available by our television studios under licensing agreements, including the impact of the Writers Guild and SAG work stoppages in the current year, partially offset by the timing of when content was made available by our film studios.

Content licensing revenue increased in 2022 primarily due to the timing of when content was made available by our television and film studios under licensing agreements and included additional sales of content as production levels returned to normal, partially offset by the impact of a new licensing agreement for content that became exclusively available for streaming on Peacock in 2021.

Theatrical revenue relates to the worldwide distribution of our produced and acquired films for exhibition in movie theaters.

Theatrical revenue increased in 2023 primarily due to higher revenue from releases in our 2023 slate, including The Super Mario Bros. Movie, Oppenheimer and Fast X, compared to revenue from releases in our 2022 slate, including Jurassic World: Dominion and Minions: The Rise of Gru.

Theatrical revenue increased in 2022 primarily due to higher revenue from releases in our 2022 slate compared to releases in our 2021 slate, including F9.

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 in 2023 primarily due to lower costs associated with content licensing sales, including the impact of the Writers Guild and SAG work stoppages in the current year, partially offset by higher costs associated with theatrical releases.

Programming and production costs increased in 2022 primarily due to higher costs associated with content licensing sales and theatrical releases.

Marketing and promotion expenses consist primarily of expenses associated with advertising for our theatrical releases.

Marketing and promotion expenses decreased in 2023 primarily due to decreased spending on current year and upcoming theatrical film releases.

Marketing and promotion expenses increased in 2022 primarily due to higher spending on theatrical film releases.

Other expenses include salaries, employee benefits, rent and other overhead expenses.

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Theme Parks Segment Results of Operations

Theme parks segment revenue primarily relates to guest spending at our theme parks, including ticket sales and in-park spending, and to our consumer products business.

Theme park segment revenue increased in 2023 driven by an increase at our international theme parks, which had COVID-19 related restrictions during certain periods in the prior year, and an increase at our domestic theme parks primarily due to higher revenue at our theme park in Hollywood driven by the opening of Super Nintendo World, partially offset by lower revenue at our theme park in Orlando.

Theme parks segment revenue increased in 2022 primarily due to improved operating conditions compared to 2021, when our theme parks in Orlando, Hollywood and Japan were impacted by COVID-19 restrictions, as well as the operations of Universal Beijing Resort, which opened in September 2021. Results at our international theme parks in 2022 were negatively impacted by fluctuations in foreign currency exchange rates and by temporary restrictions and closures that were reinstituted in certain periods due to COVID-19.

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 segment costs and expenses increased in 2023 due to higher costs primarily associated with increased guest attendance.

Theme parks segment costs and expenses increased in 2022 primarily as a result of lower operating costs in 2021 due to COVID-19 restrictions at our theme parks and due to operating costs associated with Universal Beijing Resort in 2022, which were higher than pre-opening costs in 2021.

Content & Experiences Headquarters, Other and Eliminations

Headquarters and Other Results of Operations

Headquarters and Other expenses include overhead, personnel costs and costs associated with corporate initiatives. Expenses increased in 2023 primarily due to an increase in employee-related costs, partially offset by lower severance charges in 2023 compared to 2022. Expenses increased in 2022 primarily due to severance charges, partially offset by a decrease in employee-related costs compared to 2021.

Eliminations

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 within the Content & Experiences business. Refer to Note 2 for additional information on transactions between our segments.

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Corporate, Other and Eliminations

Corporate and Other Results of Operations

Corporate and Other primarily includes overhead and personnel costs; Sky-branded video services and television networks in Germany; 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 increased in 2023 reflecting higher revenue across each of our other businesses and decreased in 2022 primarily due to decreased revenue related to Sky operations in Germany, including the negative impact of foreign currency. The decrease in 2022 was partially offset by an increase in revenue at Comcast Spectacor compared to 2021, which included the impact of COVID-19, and by revenue at Xumo related to the Xumo Play streaming service.

Corporate and Other costs and expenses increased in 2023 primarily due to higher costs related to Sky operations in Germany, including the impact of the timing of recognition of costs related to the 2022 FIFA World Cup and charges related to entertainment content in the current year, and increased costs related to Xumo.

Corporate and Other costs and expenses decreased in 2022 primarily due to lower costs related to Sky operations in Germany, including the impact of foreign currency and the impact of the timing of recognition of costs related to the 2022 FIFA World Cup, and lower administrative costs, partially offset by costs related to Xumo.

Eliminations

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 are affected by the periodic broadcast of the Olympic Games, including the Beijing and Tokyo Olympics in 2022 and 2021, respectively. 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.

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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.

(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, and Sky transaction-related costs in 2021.

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 allow the evaluation of 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

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Reconciliation of Residential Connectivity & Platforms Constant Currency

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

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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. Refer to the “Contractual Obligations” discussion below for additional information regarding our cash requirements. 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 December 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.

We are subject to customary covenants and restrictions set forth in agreements related to debt issued at Comcast and certain of our subsidiaries, including the indentures governing our public debt securities and the credit agreement governing the Comcast revolving credit facility. Our credit facility contains a financial covenant pertaining to leverage, which is the ratio of debt to EBITDA, as defined in the credit facility. Compliance with this financial covenant is tested on a quarterly basis under the terms of the credit facility. As of December 31, 2023, we met this financial covenant by a significant margin, and we expect to remain in compliance with this financial covenant and other covenants related to our debt. The covenants and restrictions in our revolving credit facility do not apply to certain entities, including Sky and our international theme parks.

Operating Activities

The variance in changes in operating assets and liabilities in 2023 was primarily related to the timing of amortization and related payments for our film and television costs, including reduced spending due to the work stoppages and the timing of sports, and the timing of deferred revenue, as well as increases in accounts receivable, partially offset by higher accruals related to severance in 2022 compared to 2023.

The increase in payments of interest in 2023 was primarily due to increased debt balances following debt issuances in the current year, cash proceeds from the early settlement of interest rate swaps related to our collateralized obligation in the prior year and higher weighted-average interest rates.

The decrease in income tax payments in 2023 was primarily due to higher payments in the prior year relating to the preceding tax year, partially offset by higher taxable income in the current year. Income tax payments related to the sale of our investment in Hulu will primarily be made in 2024.

Investing Activities

Net cash used in investing activities decreased in 2023 primarily due to net proceeds received as an advance on the sale of our interest in Hulu (see Note 8) and decreased purchases of short-term investments in the current year. These decreases were partially offset by increased capital expenditures and decreased proceeds from the maturity of short-term investments.

We expect to receive additional proceeds for the sale of our interest in Hulu in 2024 following the finalization of the third-party appraisal process, at which time we will recognize the sale of our interest. See Note 8.

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In September 2023, we entered into an agreement with T-Mobile to sell certain of our spectrum licenses. The agreement provides us with a right to remove certain licenses from the transaction, which will result in total cash consideration between $1.2 billion and $3.3 billion. The sale is expected to close in 2028 subject to various conditions and approvals.

Capital Expenditures

Capital expenditures increased in 2023 primarily due to increased spending on the development of the Epic Universe theme park in Orlando, $271 million associated with the acquisition of land for potential theme park expansion opportunities and increased spending in the Connectivity & Platforms business. The costs associated with the construction of Universal Beijing Resort are presented separately in our consolidated statements of cash flows. See Note 8.

Our most significant capital expenditures are within the Connectivity & Platforms business, and we expect that this will continue in the future. Connectivity & Platforms’ capital expenditures increased primarily due to increased spending on line extensions and scalable infrastructure, partially offset by decreased spending on customer premise equipment and support capital. The table below summarizes the capital expenditures we incurred in our segments in the Connectivity & Platforms business in 2023, 2022 and 2021.

We expect our capital expenditures in 2024 will continue to be focused on investments in line extensions for the expansion of both business services and residential passings in the Connectivity & Platforms business, in scalable infrastructure as we increase capacity and continue to execute our plans to upgrade our network to deliver multigigabit speeds, and in the continued deployment of wireless gateways. In addition, we expect to continue investment in existing and new attractions at our Universal theme parks, including the development of Epic Universe. Capital expenditures for subsequent years will depend on numerous factors, including competition, changes in technology, regulatory changes, the timing and rate of deployment of new services, the capacity required for existing services, the timing of new attractions at our theme parks and potential acquisitions.

Financing Activities

Net cash used in financing activities increased in 2023 primarily due to repayment of a collateralized obligation in the current year (see Note 8), higher repurchases and repayments of debt, repayments of short-term borrowings, net in the current year compared to proceeds from short-term borrowings, net in the prior year, and higher settlements of derivative contracts in the prior year, which are included in other financing activities. These increases were partially offset by higher proceeds from borrowings in the current year and a decrease in repurchases of common stock under our share repurchase program and employee plans.

In May 2023, we issued $5.0 billion aggregate principal amount of fixed-rate senior notes maturing between 2029 and 2064, of which $2.9 billion was used to purchase senior notes maturing in 2024 and 2025. In February 2023, we issued $1.0 billion aggregate principal amount of fixed-rate senior notes maturing in 2033 and an amount equal to the net proceeds from this issuance is intended to finance or refinance one or more green projects, assets or activities that meet certain specified eligibility criteria.

In 2023, we also had net repayments of $660 million under our commercial paper program and made total debt repayments of $4.0 billion, including the $2.9 billion purchase of senior notes.

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 6 and 8 for additional information on our financing activities.

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Share Repurchases and Dividends

In the second quarter of 2021, we restarted our share repurchase program, which had been paused since the beginning of 2019. In 2023, we repurchased a total of 262 million shares of our Class A common stock for $11.0 billion under the share repurchase program authorization of $20 billion approved by our Board of Directors in September 2022. We did not purchase any shares outside of the program. As of December 31, 2023, we had $5.0 billion remaining under the authorization, and in January 2024, our Board of Directors terminated the existing program and approved a new share repurchase program authorization of $15 billion, which has no expiration date. We expect to repurchase additional shares of our Class A common stock under this new program in the open market or in private transactions, subject to market and other conditions.

In 2023, our Board of Directors declared quarterly dividends of $0.29 per share, including our fourth quarter dividend payable in January 2024 and we made dividend payments of $4.8 billion. In January 2024, our Board of Directors approved a 6.9% increase in our dividend to $1.24 per share on an annualized basis and approved our first quarter dividend of $0.31 per share, to be paid in April 2024. We expect to continue to pay quarterly dividends, although each dividend is subject to approval by our Board of Directors.

The chart below summarizes share repurchases and dividend payments. In addition, we paid $291 million, $321 million and $674 million in 2023, 2022 and 2021, respectively, related to employee taxes associated with the administration of our share-based compensation plans. Our share repurchases have more than offset dilution that resulted from issuing our Class A common stock in connection with our share-based compensation plans in those years, thereby having the effect of reducing the total number of our Class A common stock outstanding.

Contractual Obligations

The following table summarizes our most significant contractual obligations as of December 31, 2023:

(a) Amounts represent the face value of debt and exclude interest payments.

Our largest contractual obligations relate to our outstanding debt. As of December 31, 2023, our debt had a weighted-average time to maturity of approximately 16 years. Including the effects of our derivative financial instruments, as of December 31, 2023, our debt had a weighted-average interest rate based on the stated coupons of 3.6% and the percentage of our debt obligations that were fixed-rate debt was 97%. We typically fund and expect to continue to be able to fund debt maturities and interest payments with cash flows generated in our operations; existing cash, cash equivalents and investments; or proceeds from additional external financing. See Note 6 and Item 7A for additional information on our debt.

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We also have significant contractual obligations associated with our programming and production expenses. We have multiyear agreements for broadcast rights of sporting events, such as for the NFL, the Olympics and the English Premier League, which represent the substantial majority of our programming and production obligations. Connectivity & Platforms’ programming expenses related to the distribution of third-party television networks are generally acquired under multiyear distribution agreements with fees based on the number of subscribers receiving the television network programming and a per subscriber fee. The amounts included in the table above relate to minimum guaranteed commitments for these distribution agreements or fixed fees, and as a result, we expect the total fees to be paid under these arrangements to be significantly higher than the amounts included above. We have funded and expect to continue to be able to fund our programming and production obligations with the cash generated from our operations. As of December 31, 2023, approximately 29% of cash payments related to our programming and production obligations are due after five years, of which the vast majority related to multiyear sports rights agreements. See Note 4 for additional information on programming and production costs.

Our other contractual obligations relate primarily to operating leases (see Note 15) and other arrangements recorded in our consolidated balance sheets and/or disclosed in the notes to our financial statements, including benefit plan obligations (see Note 11), liabilities for uncertain tax positions (see Note 5), our remaining unfunded capital commitment to Atairos (see Note 8) and a contractual obligation related to an interest held by a third party in the revenue of certain theme parks (see Note 15).

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.

(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 8 for additional information.

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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 December 31, 2023 and 2022, the combined Guarantors have noncurrent notes payable to non-guarantor subsidiaries of $136 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 December 31, 2023 and 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 $104 billion and $97 billion, respectively, and noncurrent notes receivable from non-guarantor subsidiaries of $14 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 Estimates

The preparation of our 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.

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We believe our estimates associated with the valuation and impairment testing of goodwill and cable franchise rights and the accounting for film and television costs are critical in the preparation of our consolidated financial statements. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed the related disclosures below. See also Notes 4 and 10.

Valuation and Impairment Testing of Goodwill and Cable Franchise Rights

We assess the recoverability of our goodwill and indefinite-lived intangible assets, including cable franchise rights, annually as of July 1, or more frequently whenever events or substantive changes in circumstances indicate that the assets might be impaired. The assessment of recoverability may first consider qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit or an indefinite-lived intangible asset is less than its carrying amount. A quantitative assessment is performed if the qualitative assessment results in a more-likely-than-not determination or if a qualitative assessment is not performed. In connection with our impairment assessment process, in order to support our qualitative assessments, we typically perform quantitative assessments of our reporting units and cable franchise rights approximately once every four years.

Goodwill

Goodwill results from business combinations and represents the excess amount of the consideration paid over the identifiable assets and liabilities recorded in the acquisition. We test goodwill for impairment at the reporting unit level.

When performing a quantitative assessment, we estimate the fair values of our reporting units primarily based on a discounted cash flow analysis that involves significant judgment, including market participant estimates of future cash flows expected to be generated by the business and the selection of discount rates. When performing this analysis, we also consider multiples of earnings from comparable public companies and recent market transactions.

We assessed goodwill for impairment in connection with our change in segment presentation in the first quarter of 2023. See Note 2 for additional information. Based on our assessment, no impairment was required. We also performed a qualitative assessment for goodwill in each of our reporting units in connection with our annual impairment testing. This analysis considered the results of previous quantitative assessments, and also considered various factors that would affect the estimated fair value of these reporting units in our qualitative assessments, including changes in projected future cash flows, recent market transactions and overall macroeconomic conditions, discount rates, and changes in our market capitalization. Based on these assessments, we concluded that it was more likely than not that the estimated fair values of our reporting units were substantially higher than their carrying values and that the performance of a quantitative impairment test was not required.

In 2022, in connection with our annual impairment testing, we recorded an impairment of $8.1 billion related to goodwill in our Sky reporting unit (See Note 10). In preparing this assessment, we estimated the fair value of the Sky reporting unit using a discounted cash flow analysis. This analysis involved significant judgment, including market participant estimates of future cash flows expected to be generated by the business, including the estimated impact of macroeconomic conditions in the Sky territories, as well as the selection of the discount rate, which increased by 125 basis points compared to the prior analysis. When analyzing the fair value indicated under the discounted cash flow model, we also considered multiples of earnings from comparable public companies and recent market transactions.

Changes in market conditions, laws and regulations, and key assumptions made in future quantitative assessments, including expected cash flows, competitive factors and discount rates, could negatively impact the results of future impairment testing and could result in the recognition of an additional impairment charge.

Cable Franchise Rights

Our cable franchise rights assets result from agreements we have with state and local governments that allow us to construct and operate a cable business within a specified geographic area. The value of a franchise is derived from the economic benefits we receive from the right to solicit new customers and to market additional services in a particular service area. The amounts we record for cable franchise rights are primarily a result of cable system acquisitions. Typically when we acquire a cable system, the most significant asset we record is the value of the cable franchise rights.

When performing a quantitative assessment, we estimate the fair values of our cable franchise rights primarily based on a discounted cash flow analysis that involves significant judgment, including the estimate of future cash flows and the selection of discount rates.

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In 2023, we performed a qualitative assessment of our cable franchise rights. At the time of our previous quantitative assessment in 2022, which was pursuant to our practice of performing quantitative assessments of cable franchise rights approximately once every four years, the estimated fair values of our franchise rights substantially exceeded their carrying values. We also considered various factors that would affect the estimated fair values of our cable franchise rights in our qualitative assessment, including changes in our projected future cash flows, recent market transactions and overall macroeconomic conditions, discount rates, and changes in our market capitalization. Based on this assessment, we concluded that it was more likely than not that the estimated fair values of our cable franchise rights were substantially higher than the carrying values and that the performance of a quantitative impairment test was not required.

Changes in market conditions, laws and regulations and key assumptions made in future quantitative assessments, including expected cash flows, competitive factors and discount rates, could negatively impact the results of future impairment testing and could result in the recognition of an impairment charge.

Film and Television Content

We capitalize costs for owned film and television content, including direct costs, production overhead, print costs, development costs and interest, as well as acquired libraries. We have determined that the predominant monetization strategy for the substantial majority of our content is on an individual basis. Amortization for owned content predominantly monetized on an individual basis and accrued costs associated with participations and residuals payments are recorded using the individual film forecast computation method, which recognizes the costs in the same ratio as the associated ultimate revenue.

Our estimates of ultimate revenue for films generally include revenue from all sources that are expected to be earned within 10 years from the date of a film’s initial release. These estimates are based on the distribution strategy and historical performance of similar content, as well as factors unique to the content itself. The most sensitive factor affecting our estimate of ultimate revenue for a film intended for theatrical release is the film’s theatrical performance, as subsequent revenue from the licensing and sale of a film has historically exhibited a high correlation to its theatrical performance. Upon a film’s release, our estimates of revenue from succeeding markets, including from content licensing across multiple platforms and home entertainment sales, are revised based on historical relationships and an analysis of current market trends.

With respect to television series or other owned television programming, the most sensitive factor affecting our estimate of ultimate revenue is whether the series can be successfully licensed beyond its initial license window. Initial estimates of ultimate revenue are limited to the amount of revenue attributed to the initial license window. Once it is determined that a television series or other owned television programming can be licensed beyond the initial license window, revenue estimates for these additional windows or platforms, such as U.S. and international syndication, home entertainment, and other distribution platforms, are included in ultimate revenue. Revenue estimates for produced episodes include revenue expected to be earned within 10 years of delivery of the initial episode or, if still in production, 5 years from the delivery of the most recent episode, if later.

We capitalize the costs of licensed content when the license period begins, the content is made available for use and the costs of the licenses are known. Licensed content is amortized as the associated programs are used, incorporating estimated viewing patterns. We recognize the costs of multiyear, live-event sports rights as the rights are utilized over the contract term based on estimated relative value. Estimated relative value is generally based on terms of the contract and the nature of and potential revenue generation of the deliverables within the contract.

Capitalized film and television costs are subject to impairment testing when certain triggering events are identified. The substantial majority of our owned content is evaluated for impairment on an individual title basis. Licensed content that is not part of a film group is tested for impairment primarily on a channel, network or platform basis, with the exception of our broadcast networks and owned local broadcast television stations, which are tested on a daypart basis. Sports rights are accounted for as executory contracts and are not subject to impairment. When performing an impairment assessment, we estimate fair value primarily based on a discounted cash flow analysis that involves significant judgment, including market participant estimates of future cash flows, which are supported by internal forecasts. Impairments of capitalized film and television costs were not material in any of the periods presented.

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