Investments

3 Months Ended

Mar. 31, 2020

Investment and Other Income (Loss), Net



	Three Months Ended March 31,
(in millions)	2020			2019
Equity in net income (losses) of investees, net	$	(668	)	$	262
Realized and unrealized gains (losses) on equity securities, net	(58		)	214
Other income (loss), net	10			200
Investment and other income (loss), net	$	(716	)	$	676



(in millions)	March 31, 2020		December 31, 2019
Equity method	$	4,777	$	5,347
Marketable equity securities	320		353
Nonmarketable equity securities	1,892		1,896
Other investments	1,794		1,796
Total investments	8,783		9,392
Less: Current investments	1,703		1,709
Less: Investment securing collateralized obligation	612		694
Noncurrent investments	$	6,468	$	6,989

Equity Method

Atairos

Atairos follows investment company accounting and records its investments at their fair values each reporting period with the net gains or losses reflected in its statement of operations. We recognize our share of these gains and losses in equity in net income (losses) of investees, net. For the three months ended March 31, 2020 and 2019, we recognized losses of $581 million and income of $374 million, respectively. For the three months ended March 31, 2020 and 2019, we made cash capital contributions totaling $12 million and $37 million, respectively, to Atairos. As of March 31, 2020 and December 31, 2019, our investment was $2.8 billion and $3.2 billion, respectively.

Hulu and Collateralized Obligation

For the three months ended March 31, 2020 and 2019, we recognized our proportionate share of Hulu’s losses of $82 million and $141 million, respectively, in equity in net income (losses) of investees, net and in the first quarter 2019, we recognized a previously deferred dilution gain of $159 million. For the three months ended March 31, 2019, we made cash capital contributions totaling $233 million to Hulu. There were no cash capital contributions made during the three months ended March 31, 2020. As of March 31, 2020 and December 31, 2019, our investment was $612 million and $694 million, respectively.

In 2019, we borrowed $5.2 billion under a term loan facility due March 2024 which is fully collateralized by the minimum guaranteed proceeds of the put/call option related to our investment in Hulu. As of March 31, 2020, the carrying value and fair value of our collateralized obligation was $5.2 billion. The estimated fair value was based on level 2 inputs that use interest rates for debt with similar terms and remaining maturities. We present our investment in Hulu and the term loan separately in our condensed consolidated balance sheet in the captions “investment securing collateralized obligation” and “collateralized obligation,” respectively. The recorded value of our investment reflects our historical cost in applying the equity method, and as a result, is less than its fair value.

Marketable Equity Securities

Peloton

Following Peloton’s initial public offering in September 2019, we present our investment in marketable equity securities, which was previously presented in nonmarketable equity securities. For the three months ended March 31, 2020, we recognized unrealized losses of $19 million in realized and unrealized gains (losses) on equity securities, net. As of March 31, 2020 and December 31, 2019, our investment in Peloton was $275 million and $294 million, respectively.

Snap

In the fourth quarter of 2019, we sold our investment in Snap. For the three months ended March 31, 2019, we recognized unrealized gains of $162 million in realized and unrealized gains (losses) on equity securities, net.

Other Investments

AirTouch

As of March 31, 2020 and December 31, 2019, our investment in the two series of preferred stock of Verizon Americas, Inc., formerly known as AirTouch Communications, Inc. (“AirTouch”) was $1.7 billion and $1.6 billion, respectively, and the associated liability related to redeemable subsidiary preferred shares was $1.7 billion as of both dates.

In April 2020, AirTouch redeemed the preferred stock and we received cash payments totaling $1.7 billion. Subsequently, we redeemed and repurchased the three series of subsidiary preferred stock and made cash payments totaling $1.8 billion.