The following discussion is provided as a supplement to, and should be read in
conjunction with, the condensed consolidated financial statements and related
notes included in this Quarterly Report on Form 10-Q and our 2020 Annual Report
on Form 10-K.
Overview
We are a global media and technology company with three primary businesses:
Comcast Cable, NBCUniversal, and Sky. We present our operations for (1) Comcast
Cable in one reportable business segment, referred to as Cable Communications;
(2) NBCUniversal in three reportable business segments: Media, Studios and Theme
Parks (collectively, the "NBCUniversal segments"); and (3) Sky in one reportable
business segment. Refer to Note 2 for information on our reportable segments,
including a description of the segment change implemented in the first quarter
of 2021. All amounts are presented on a consistent basis under the new segment
structure.
Impacts of COVID-19
The novel coronavirus disease 2019 ("COVID-19") and measures taken to prevent
its spread across the globe have impacted our businesses in a number of ways.
COVID-19 has had material negative impacts on NBCUniversal and Sky results of
operations primarily due to the temporary restrictions and closures at our theme
parks and the impacts on professional sports, respectively. We expect the
effects of the COVID-19 pandemic will continue to adversely impact our
consolidated results of operations over the near to medium term, although the
extent of such impact will depend on restrictive governmental measures, U.S. and
global economic conditions, expanded availability and acceptance of vaccines and
consumer behavior in response to COVID-19. The most significant effects of
COVID-19 began in the latter part of the first quarter of 2020, affecting the
comparability of periods included in this report. The following summary provides
a discussion of current and potential future effects of the pandemic with direct
impacts to our businesses.
Cable Communications
•Beginning in March 2020, new qualifying customers for Internet Essentials, our
low-income internet adoption program, receive 60 days of free broadband
services. Our customer metrics do not include customers in the free Internet
Essentials offer or certain high-risk customers who continued to receive service
following nonpayment as a result of COVID-19 programs. The number of customers
excluded from our customer metrics has continued to decrease as some of these
customers either began paying for service, resulting in customer net additions,
or disconnected and no longer receive service, and we expect this to continue in
future periods. We have experienced improvement in customer collections;
however, we believe there continues to be a risk associated with collections on
our outstanding receivables as a result of COVID-19.
NBCUniversal
•Our theme parks in Orlando and Hollywood operated without capacity restrictions
in the third quarter of 2021, following periods with capacity restrictions in
place that ended in the second quarter of 2021. Our theme park in Hollywood
began requiring proof of vaccination or a negative COVID-19 test result for park
entry in accordance with local requirements in the fourth quarter of 2021. Our
theme park in Japan has been operating with capacity restrictions and our newest
theme park, Universal Beijing Resort, opened in September 2021 with capacity
restrictions. The capacity restrictions and temporary closures of our theme
parks at various times in 2020 and 2021 have had a significant impact on our
revenue and Adjusted EBITDA for the three and nine months ended September 30,
2021 on a consolidated basis. The results of operations at our theme parks may
continue to be negatively impacted and we cannot predict if some or all of our
parks will remain open or continue to be subject to capacity restrictions, or
the level of attendance at our reopened parks. The development of the Epic
Universe theme park in Orlando resumed in the first quarter of 2021.
•Delays to the start of seasons for certain professional sports leagues,
including the 2020-2021 NHL and NBA seasons, resulted in the shift of additional
events into the first half of 2021 compared to a normal year. The delays
impacted the timing of revenue and expense recognition because both advertising
revenue and costs associated with broadcasting these programs are recognized
when events are broadcast. The timing of sports seasons generally returned to a
normal calendar beginning in the third quarter of 2021. In addition, the Tokyo
Olympics were postponed from the third quarter of 2020 and took place in the
third quarter of 2021, resulting in a corresponding delay of the associated
revenue and costs.
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•Our studio production operations have generally returned to full capacity. With
the temporary closure or limited capacity operation of many movie theaters
worldwide, we have delayed or altered the theatrical distribution strategy for
certain of our films, both domestically and internationally. Delays in
theatrical releases affect both current and future periods as a result of
corresponding delays in subsequent content licensing windows. Results of
operations in our Studios segment may be negatively impacted over the near to
medium term as a result of COVID-19.
Sky
•Direct-to-consumer revenue has been negatively impacted, and future periods may
be negatively impacted, as a result of lower sports subscription revenue due to
the closures and extent of reopening of our commercial customers' locations. In
addition, delays to the start of the 2020-2021 seasons for certain sports,
including European football, resulted in the shift of additional events and the
significant costs associated with broadcasting these programs into the first and
second quarters of 2021 compared to a normal year. The timing of sports seasons
generally returned to a normal calendar beginning in the third quarter of 2021.
In 2020, our businesses implemented separate cost savings initiatives, with the
most significant relating to severance at NBCUniversal in connection with the
realignment of the operating structure in our television businesses as well as
overall reductions in the cost base. The costs of these initiatives were
presented in Corporate and Other. Payments related to NBCUniversal employee
severance are expected to be substantially complete in 2021 and the related
costs savings will be realized in operating costs and expenses primarily
beginning in 2021. A portion of these cost savings may be reallocated to
investments in content and other strategic initiatives.
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