Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 15: Commitments and Contingencies

Sports Rights and Licensed Content

Our most significant fixed-price purchase obligations relate to long-term commitments for sports rights and licensed content. Refer to Note 4 for additional information.

Leases

Our leases consist primarily of real estate, vehicles and other equipment. We determine if an arrangement is a lease at inception. Lease assets and liabilities are recognized upon commencement of the lease based on the present value of the future minimum lease payments over the lease term. The lease term includes options to extend the lease when it is reasonably certain that we will exercise that option. We generally utilize our incremental borrowing rate based on information available at the commencement of the lease in determining the present value of future payments. The lease asset also includes any lease payments made and initial direct costs incurred and excludes lease incentives. Lease assets and liabilities are not recorded for leases with an initial term of one year or less. Lease expense for operating leases recorded in the balance sheet is included in operating costs and expenses and is based on the future minimum lease payments recognized on a straight-line basis over the term of the lease plus any variable lease costs. In 2021, 2020 and 2019, operating lease expenses, inclusive of short-term and variable lease expenses, recognized in our consolidated statement of income were $1.2 billion, $1.1 billion and $1.1 billion, respectively. These amounts do not include lease costs associated with production activities or other amounts capitalized in our consolidated balance sheet, which were not material.

The table below summarizes the operating lease assets and liabilities recorded in our consolidated balance sheet.

December 31 (in millions)	2021		2020
Other noncurrent assets, net	$	6,467	$	3,784
Accrued expenses and other current liabilities	$	766	$	718
Other noncurrent liabilities	$	6,473	$	3,740

The table below summarizes our future minimum lease commitments for operating leases as of December 31, 2021.

(in millions)	December 31, 2021
2022	$	932
2023	875
2024	771
2025	626
2026	551
Thereafter	7,933
Total future minimum lease payments	11,688
Less: imputed interest	4,449
Total liability	$	7,239

The weighted-average remaining lease terms for operating leases and the weighted-average discount rates used to calculate our operating lease liabilities as of December 31, 2021 were 19 years and 3.94%, respectively, and as of December 31, 2020 were 9 years and 3.58%, respectively.

In 2021, 2020 and 2019, cash payments for operating leases recorded in the consolidated balance sheet were $987 million, $936 million and $914 million respectively. We recognized operating lease assets and liabilities of $2.8 billion related to Universal Beijing Resort in 2021. Lease assets and liabilities associated with other operating leases entered into or modified were not material in any period presented.

Contractual Obligation

We are party to a contractual obligation that involves an interest held by a third party in the revenue of certain theme parks. The arrangement provides the counterparty with the right to periodic payments associated with current period revenue which are recorded as an operating expense, and beginning in June 2017, the option to require NBCUniversal to purchase the interest for cash in an amount based on a contractual formula. The contractual formula is based on an average of specified historical theme park revenue at the time of exercise, which amount could be significantly higher than our carrying value. As of December 31,

2021, our carrying value was $1.1 billion, and the estimated value of the contractual obligation was $1.5 billion based on inputs to the contractual formula as of that date.

Redeemable Subsidiary Preferred Stock

In the first quarter of 2021, we redeemed all of the NBCUniversal Enterprise, Inc. preferred stock and made cash payments equal to the aggregate liquidation preference of $725 million. As of December 31, 2020, the preferred stock had a carrying value equal to its liquidation preference and was presented in redeemable noncontrolling interests and redeemable subsidiary preferred stock.

Contingencies

We are subject to legal proceedings and claims that arise in the ordinary course of our business. While the amount of ultimate liability with respect to such actions is not expected to materially affect our results of operations, cash flows or financial position, any litigation resulting from any such legal proceedings or claims could be time-consuming and injure our reputation.