Note 8: Significant Transactions

2018

Sky Transaction

On October 9, 2018, in connection with our offer to acquire the share capital of Sky, we acquired a controlling interest in Sky through a series of purchases of Sky shares at our offer price of £17.28 per Sky share. In the fourth quarter of 2018, we acquired the remaining Sky shares and now own 100% of Sky’s equity interests. Total cash consideration was £30.2 billion (approximately $39.4 billion using the exchange rates on the purchase dates).

Sky is one of Europe’s leading entertainment companies, which primarily includes a direct-to-consumer business, providing video, high-speed internet, voice and wireless phone services, and a content business, operating entertainment networks, the Sky News broadcast network and Sky Sports networks. We believe the combination of our global communications, media and entertainment businesses will enable the delivery of innovations in technology and a strengthened content portfolio to an expanded worldwide audience across multiple platforms.

To finance the acquisition, we issued $27.0 billion aggregate amount of senior unsecured fixed and floating rate notes that will mature between 2020 and 2058 and we borrowed £6.6 billion ($8.7 billion using the exchange rates on the dates of borrowing) under a £7.0 billion unsecured sterling-denominated term loan credit agreement and $3.0 billion under a $3.0 billion unsecured dollar-denominated term loan credit agreement. The unsecured term loans and senior notes are guaranteed by Comcast Cable and NBCUniversal. The remaining amount of consideration was funded using cash on hand.

Preliminary Allocation of Purchase Price

We have applied acquisition accounting to Sky. Sky’s results of operations are included in our consolidated results of operations since the acquisition date and are reported in our Sky segment. The net assets of Sky were recorded at their estimated fair value using Level 3 inputs. In valuing acquired assets and liabilities, fair value estimates are based on, but are not limited to, future expected cash flows, market rate assumptions for contractual obligations and appropriate discount rates. The estimated values are not yet final and are subject to change, and the changes could be significant. We will finalize the amounts recognized as soon as possible as we obtain the information necessary to complete the analysis, but no later than one year from the acquisition date.

The table below presents the preliminary allocation of the all-cash purchase price of £30.2 billion, or $39.4 billion, to the assets and liabilities of Sky as a result of the transaction.



Preliminary Allocation of Purchase Price
(in millions)
Consideration transferred	$	39,387

Preliminary allocation of purchase price
Cash	$	1,283
Accounts receivable and other current assets	2,405
Film and television costs (See Note 4)	2,526
Property and equipment (See Note 11)	3,386
Intangible assets (See Note 12)	20,628
Accounts payable, accrued liabilities and other current liabilities	(5,791		)
Long-term debt (See Note 7)	(11,215		)
Deferred tax assets (liabilities), net (See Note 5)	(1,903		)
Other noncurrent assets and (liabilities), net	(1,809		)
Fair value of identifiable net assets acquired	9,510
Goodwill (See Note 12)	$	29,877

Intangible Assets

Finite-lived intangible assets primarily consist of customer relationships with a carrying amount of $11.8 billion and developed technology with a carrying amount of $1.8 billion, with estimated useful lives of between 4 and 18 years. Indefinite-lived assets consist of trade names with a carrying amount of $6.8 billion.

Goodwill

Goodwill consists primarily of intangible assets that do not qualify for separate recognition, including increased footprint, assembled workforce, noncontractual relationships and agreements. Since our allocation of the purchase price and estimated fair values of identifiable assets and liabilities is not yet final, the amount of the total goodwill is not yet final and is subject to change. The acquired goodwill is not expected to be deductible for tax purposes.

Acquisition-Related Costs

As a result of the Sky transaction, we have incurred incremental expenses including the U.K. share acquisition tax, success-based investment banker fees and fees to attorneys, accountants and other professional advisors, which are reflected in other operating and administrative expenses. We also incurred certain financing costs associated with our borrowings, which are reflected in interest expense. The table below presents the amounts related to these expenses included in our consolidated statement of income.



(in millions)	Year ended December 31, 2018
Other operating and administrative expenses	$	339
Interest expense	$	63

Actual and Unaudited Pro Forma Information

Our consolidated revenue and net income (loss) attributable to Comcast Corporation from October 9, 2018 to December 31, 2018 included $4.6 billion and $47.5 million, respectively, resulting from Sky’s operations.

The following unaudited pro forma information has been presented as if the Sky transaction occurred on January 1, 2017. This information is based on historical results of operations, adjusted for allocation of purchase price and other acquisition accounting adjustments, and is not necessarily indicative of what the results would have been had we operated the business since January 1, 2017. For pro forma purposes, 2018 earnings were adjusted to exclude the acquisition-related costs noted above, and 2017 earnings were adjusted to include these costs. No pro forma adjustments have been made for cost savings or synergies that have been or may be achieved by the combined businesses.



Year ended December 31 (in millions, except per share data)	2018		2017
Revenue	$	109,518	$	102,971
Net income attributable to Comcast Corporation	$	11,365	$	22,308
Basic earnings per common share attributable to Comcast Corporation shareholders	$	2.48	$	4.74
Diluted earnings per common share attributable to Comcast Corporation shareholders	$	2.45	$	4.65

Universal Beijing Resort

We entered into an agreement with a consortium of Chinese state-owned companies to build and operate a Universal theme park and resort in Beijing, China (“Universal Beijing Resort”). We own a 30% interest in Universal Beijing Resort and the construction is being funded through a combination of debt financing and equity contributions from the investors in accordance with their equity interests. The debt financing, which is being provided by a syndicate of Chinese financial institutions, contains certain financial and operating covenants and a maximum borrowing limit of ¥26.6 billion RMB (approximately $4 billion). The debt financing is secured by the assets of Universal Beijing Resort and the equity interests of the investors. As of December 31, 2018, Universal Beijing Resort had borrowed approximately $569 million under the financing agreement.

We have concluded that Universal Beijing Resort is a variable interest entity based on its governance structure, and we consolidate it because we have the power to direct activities that most significantly impact its economic performance. There are no liquidity arrangements, guarantees or other financial commitments between us and Universal Beijing Resort, and therefore our maximum risk of financial loss is our 30% interest. Universal Beijing Resort’s results of operations are reported in our Theme Parks segment.

In March 2018, Universal Beijing Resort received initial equity investments through a combination of cash and noncash contributions from the investors. As of December 31, 2018, our consolidated balance sheet included assets, primarily including property and equipment, and liabilities of Universal Beijing Resort totaling $1.5 billion and $1.0 billion, respectively.

2017

FCC Spectrum Auction

On April 13, 2017, the Federal Communications Commission announced the results of its spectrum auction. In the auction, NBCUniversal relinquished its spectrum rights in the New York, Philadelphia and Chicago designated market areas (“DMAs”) where NBC and Telemundo had overlapping spectrum. NBCUniversal received proceeds of $482 million in July 2017, which were recorded in other investing activities in our consolidated statement of cash flows. NBCUniversal recognized a pretax gain of $337 million in other operating gains in 2017. NBC and Telemundo stations share broadcast signals in these DMAs. In connection with the auction, we also acquired the rights to $1.7 billion of spectrum in the second quarter of 2017, which were recorded to other intangible assets, net. We had previously made a deposit of $1.8 billion to participate in the auction in 2016 and received a refund for amounts in excess of the purchase price in 2017.

Universal Studios Japan

On April 6, 2017, we acquired the remaining interests in Universal Studios Japan that we did not already own for $2.3 billion. The acquisition was funded through cash on hand and borrowings under our commercial paper program. Because we maintained control of Universal Studios Japan, the difference between the consideration transferred and the recorded value of the noncontrolling interests, as well as the related tax and accumulated other comprehensive income impacts, were recorded to additional paid-in capital.

2016

DreamWorks Animation

On August 22, 2016, we acquired all of the outstanding stock of DreamWorks Animation for $3.8 billion. DreamWorks Animation’s stockholders received $41 in cash for each share of DreamWorks Animation common stock. DreamWorks Animation creates animated feature films, television series and specials, live entertainment, and related consumer products. The results of operations for DreamWorks Animation are reported in our Filmed Entertainment segment following the acquisition date.