

Note 3: Revenue



Year ended December 31 (in millions)	2018			2017			2016
Residential:
High-speed internet	$	17,144		$	15,681		$	14,421
Video	22,455			22,874			22,204
Voice	3,960			4,090			4,159
Business services	7,129			6,437			5,705
Advertising	2,795			2,450			2,626
Other	1,660			1,538			1,462
Total Cable Communications^(a)	55,143			53,070			50,577

Distribution	6,826			6,081			5,978
Advertising	3,587			3,359			3,530
Content licensing and other	1,360			1,057			816
Total Cable Networks	11,773			10,497			10,324

Advertising	7,010			5,654			6,834
Content licensing	2,182			2,114			1,837
Distribution and other	2,247			1,795			1,414
Total Broadcast Television	11,439			9,563			10,085

Theatrical	2,111			2,192			1,560
Content licensing	2,899			2,956			2,518
Home entertainment	1,048			1,287			1,182
Other	1,094			1,160			969
Total Filmed Entertainment	7,152			7,595			6,229

Total Theme Parks	5,683			5,443			4,946
Headquarters and Other	63			45			20
Eliminations^(b)	(349		)	(307		)	(328		)
Total NBCUniversal	35,761			32,836			31,276

Direct-to-consumer	3,632			—			—
Content	304			—			—
Advertising	651			—			—
Total Sky	4,587			—			—

Corporate and Other	1,403			1,193			886
Eliminations^(b)	(2,387		)	(2,070		)	(2,003		)
Total revenue	$	94,507		$	85,029		$	80,736


(a)	For 2018, 2017 and 2016, 2.7%, 2.8% and 2.9%, respectively, of Cable Communications segment revenue was derived from franchise and other regulatory fees.


(b)	Included in Eliminations are transactions that our segments enter into with one another. See Note 2 for a description of these transactions.

We operate primarily in the United States, but also in select international markets primarily in Europe and Asia. The table below summarizes revenue by geographic location.



Year ended December 31 (in millions)	2018		2017		2016
United States	$	82,233	$	77,246	$	74,212
Foreign	12,274		7,783		6,524
Total revenue	$	94,507	$	85,029	$	80,736

No single customer accounted for a significant amount of revenue in any period presented.

Cable Communications Segment

Residential

Our Cable Communications segment generates revenue from residential customers that subscribe to our high-speed internet, video, voice, and security and automation services, which we market individually and as bundled services at a discounted rate in the United States. Revenue from residential customers that purchase bundled services at a discounted rate is allocated between the separate services based on the respective stand-alone selling prices. The stand-alone selling prices are determined based on the current prices at which we separately sell the cable services. Significant judgment is used to determine performance obligations that should be accounted for separately and the allocation of revenue when services are combined in a bundle. Revenue related to our security and automation services is reported in other revenue.

We recognize revenue from residential cable services as the services are provided on a monthly basis. Subscription rates and related charges vary according to the services and features customers receive. Customers are typically billed in advance and pay on a monthly basis. Installation fees are deferred and recognized as revenue over the period of benefit to the customer, which is less than a year for residential customers. While a portion of our residential customers are subject to contracts for their cable services, which are typically 2 years in length, based on our evaluation of the terms of these contracts, we recognize revenue for these cable services on a basis that is consistent with our customers that are not subject to contracts. Our cable services generally involve customer premise equipment, such as set-top boxes, cable modems and wireless gateways. The timing and pattern of recognition for customer premise equipment revenue are consistent with those of our residential cable services. Sales commissions related to our residential customers are expensed as incurred, as the related period of benefit is less than a year.

Under the terms of our cable franchise agreements, we are generally required to pay the cable franchising authority an amount based on our gross video revenue. We generally pass these and other similar fees through to our cable services customers and classify these fees in the respective cable service revenue, with the corresponding costs included in other operating and administrative expenses.

Business Services

Our Cable Communications segment generates revenue from business customers that subscribe to a variety of products and services. Our small business services offerings primarily include high-speed internet services, as well as voice and video services, similar to those that we provide to our residential customers, and also include cloud-based solutions that provide file sharing, online backup and web conferencing, among other features. We also offer Ethernet network services that connect multiple locations and provide higher downstream and upstream speed options to medium-sized customers and larger enterprises, as well as advanced voice services. In addition, we provide cellular backhaul services to mobile network operators to help these customers manage their network bandwidth.

Recently, we have expanded our enterprise service offerings to include a software-defined networking product and our managed solutions business to offer enterprise customers support related to Wi-Fi networks, router management, network security, business continuity risks and other services. We primarily offer our enterprise service offerings to Fortune 1000 companies and other large enterprises with multiple locations both within and outside of our cable distribution footprint where we have agreements with other companies to use their networks to provide coverage.

We recognize revenue from business services as the services are provided on a monthly basis. Substantially all of our business customers are initially under contracts, with terms typically ranging from 2 years for small and medium-sized businesses to up to 5 years for larger enterprises. At any given time, the amount of future revenue to be earned related to fixed pricing under existing agreements is equal to approximately half of our annual business services revenue, of which the substantial majority will be recognized within 2 years. Customers with contracts may only discontinue service in accordance with the terms of their contracts. We receive payments from business customers based on a billing schedule established in our contracts, which is typically on a monthly basis. Installation revenue related to our business services customers and sales commissions are generally deferred and recognized over the respective contract terms.

Advertising

Our Cable Communications segment generates revenue from the sale of advertising and technology, tools and solutions relating to advertising businesses. As part of our distribution agreements with cable networks, we generally receive an allocation of scheduled advertising time that we sell to local, regional and national advertisers. In most cases, the available advertising units are sold by our sales force. We also represent the advertising sales efforts of other multichannel video providers in some markets. Since we are acting as the principal in these arrangements, we record the advertising that is sold in advertising revenue and the fees paid to multichannel video providers in other operating and administrative expenses. In some cases, we work with representation firms as an extension of our sales force to sell a portion of the advertising units allocated to us and record the revenue net of agency commissions. In addition, we generate revenue from the sale of advertising on digital platforms. We enter into advertising arrangements with customers and have determined that a contract exists once all terms and conditions are agreed upon, typically when the number of advertising units is specifically identified and the timing of airing is scheduled. Advertisements are generally aired or viewed within one year once all terms and conditions are agreed upon. Advertising revenue from these arrangements is recognized in the period in which advertisements are aired or viewed. Payment terms vary by contract, although terms generally require payment within 30 to 60 days from when advertisements are aired or viewed. In addition, our advertising business also provides technology, tools, data-driven services and marketplace solutions to customers in the media industry, which allows advertisers to more effectively engage with their target audiences. Revenue earned in this manner is recognized when services are provided.

NBCUniversal Segments

Distribution

Our Cable Networks segment generates distribution revenue from the distribution of our cable network programming to traditional and virtual multichannel video providers. Our Broadcast Television segment generates distribution revenue from the fees received under retransmission consent agreements and associated fees received from NBC-affiliated local broadcast television stations.

Distribution revenue is accounted for as a license of functional intellectual property and is recognized as programming is provided on a monthly basis, generally under multiyear agreements. Monthly fees received under distribution agreements with multichannel video providers are generally based on the number of subscribers. Payment terms and conditions vary by contract type, although terms generally include payment within 30 to 60 days.

Advertising

Our Cable Networks and Broadcast Television segments generate advertising revenue from the sale of advertising on our cable and broadcast networks, our owned local broadcast television stations and various digital properties.

We enter into advertising arrangements with customers and have determined that a contract exists once all terms and conditions are agreed upon, typically when the number of advertising units is specifically identified and the timing of airing is scheduled. Advertisements are generally aired or viewed within one year once all terms are agreed upon. Advertising revenue is recognized, net of agency commissions, in the period in which advertisements are aired or viewed and payment occurs thereafter, with payment generally required within 30 days. In some instances, we guarantee audience ratings for the advertisements. To the extent there is a shortfall in contracts where the ratings were guaranteed, a portion of the revenue is deferred until the shortfall is settled, typically by providing additional advertising units generally within one year of the original airing.

Theatrical

Our Filmed Entertainment segment generates theatrical revenue from the worldwide theatrical release of our produced and acquired films for exhibition in movie theaters. Theatrical revenue is affected by the timing, nature and number of films released in movie theaters and their acceptance by audiences. It is also affected by the number of exhibition screens, ticket prices, the percentage of ticket sale retention by the exhibitors and the popularity of competing films at the time our films are released. We recognize theatrical revenue as the films are viewed and exhibited in theaters and payment generally occurs within 30 days after exhibition.

Content Licensing

Our Cable Networks, Broadcast Television and Filmed Entertainment segments generate revenue from the licensing of our owned film and television content in the United States and internationally to cable, broadcast and premium networks and subscription video on demand services. Our content licensing agreements generally include fixed pricing and span multiple years. For example, following a film’s theatrical release, our Filmed Entertainment segment may license the exhibition rights of a film to different customers over multiple successive distribution windows.

We recognize revenue when the content is delivered and available for use by the licensee. When the term of an existing agreement is renewed or extended, we recognize revenue at the later of when the content is available or when the renewal or extension period begins. Payment terms and conditions vary by contract type, although payments are generally collected over the license term. The amount of future revenue to be earned related to fixed pricing under existing agreements primarily relates to our Filmed Entertainment segment, which at any given time equals approximately 1 to 2 years of our annual Filmed Entertainment content licensing revenue. The majority of this revenue will be recognized within 2 years. This amount may fluctuate from period to period depending on the timing of the releases and the availability of content under existing agreements and may not represent the total content licensing revenue expected to be recognized as it does not include revenue from future agreements or from variable pricing or optional purchases under existing agreements.

For our content licensing agreements that include variable pricing, such as pricing based on the number of subscribers to a subscription video on demand service sold by our customers, we generally recognize revenue as our customers sell to their subscribers.

Home Entertainment

Our Filmed Entertainment segment generates revenue from the sale of our produced and acquired films on standard-definition digital video discs and Blu-ray discs (together, “DVDs”) and through digital distribution services. Our Cable Networks and Broadcast Television networks also generate revenue from the sale of owned programming on DVDs and through digital distribution services, which is reported in other revenue. We generally recognize revenue from DVD sales, net of estimated returns and customer incentives, on the date that DVDs are delivered to and made available for sale by retailers. Payment terms generally include payment within 60 to 90 days from delivery to the retailer.

Theme Parks

Our Theme Parks segment generates revenue primarily from ticket sales and guest spending at our Universal theme parks in Orlando, Florida; Hollywood, California; and Osaka, Japan. Guest spending includes in-park spending on food, beverages and merchandise. We recognize revenue from theme park ticket sales when the tickets are used, generally within a year from the date of purchase. For annual passes, we generally recognize revenue on a straight-line basis over the period the pass is available to be used. We recognize revenue from guest spending at the point of sale.

Sky Segment

Direct-to-Consumer

The majority of Sky’s revenue is direct-to-consumer, which primarily includes subscription revenue relating to the sale of video services to residential and business customers. Sky also provides high-speed internet, voice and wireless phone services in select countries. Generally, all of our residential customers are initially under contracts, with terms typically ranging from rolling monthly to 2 years, depending on the product and territory, and may only discontinue service in accordance with the terms of their contracts. Subscription rates and related charges vary according to the services and features customers receive and the types of equipment they use. Sky’s video, high-speed internet, voice and wireless phone services generally may be sold individually or in bundles. We recognize revenue from video, high-speed internet, voice and wireless phone services as the services are provided on a monthly basis. At any given time, the amount of future revenue to be earned related to existing agreements is equal to less than half of our annual subscription revenue, which generally will be recognized within 2 years.

Content

Sky’s content revenue includes revenue from the distribution of its channels on third-party platforms and the licensing of owned programming to third-party video providers. Refer to the NBCUniversal segment discussion of distribution and content licensing revenue for accounting policies for these types of arrangements.

Advertising

Sky sells advertising and sponsorships across its owned channels and where it represents the sales efforts of third-party channels. Sky also sells targeted advertising in the U.K., Ireland and Italy, and generates revenue from online and mobile advertising and advertising across its On Demand services. Advertising revenue is recognized when the advertising is aired or viewed. Since Sky is acting as the principal in the arrangements where it represents the sales efforts of third parties, we record the advertising that is sold in advertising revenue and the fees paid to the third-party channels in other operating and administrative expenses.

Consolidated Balance Sheet

The following tables summarize our accounts receivable and other balances that are not separately presented in our consolidated balance sheet that relate to the recognition of revenue and collection of the related cash, as well as deferred costs associated with our contracts with customers.



December 31 (in millions)	2018		2017
Receivables, gross	$	11,456	$	9,122
Less: Allowance for doubtful accounts	352		288
Receivables, net	$	11,104	$	8,834



December 31 (in millions)	2018		2017
Noncurrent receivables (included in other noncurrent assets, net)	$	1,399	$	1,184
Contract acquisition and fulfillment costs (included in other noncurrent assets, net)	$	991	$	922
Noncurrent deferred revenue (included in other noncurrent liabilities)	$	650	$	497

In our Cable Communications and Sky segments, we manage credit risk by screening applicants through the use of internal customer information, identification verification tools and credit bureau data, as well as by offering customers the opportunity to establish automatic monthly payments. If a customer’s account is delinquent, various measures are used to collect outstanding amounts, including termination of the customer’s cable services.



Note 3: Revenue



Year ended December 31 (in millions)	2018			2017			2016
Distribution	$	6,826		$	6,081		$	5,978
Advertising	3,587			3,359			3,530
Content licensing and other	1,360			1,057			816
Total Cable Networks	11,773			10,497			10,324

Advertising	7,010			5,654			6,834
Content licensing	2,182			2,114			1,837
Distribution and other	2,247			1,795			1,414
Total Broadcast Television	11,439			9,563			10,085

Theatrical	2,111			2,192			1,560
Content licensing	2,899			2,956			2,518
Home entertainment	1,048			1,287			1,182
Other	1,094			1,160			969
Total Filmed Entertainment	7,152			7,595			6,229

Total Theme Parks	5,683			5,443			4,946
Headquarters and Other	212			179			157
Eliminations^(a)	(364		)	(327		)	(343		)
Total NBCUniversal	$	35,895		$	32,950		$	31,398


(a)	Included in Eliminations are transactions that our segments enter into with one another. See Note 2 for a description of these transactions.

We operate primarily in the United States, but also in select international markets primarily in Europe and Asia. The table below summarizes revenue by geographic location.



Year ended December 31 (in millions)	2018		2017		2016
United States	$	28,309	$	25,303	$	24,907
Foreign	7,586		7,647		6,491
Total revenue	$	35,895	$	32,950	$	31,398

Distribution

Advertising

Theatrical

Content Licensing

Home Entertainment

Theme Parks

Consolidated Balance Sheet



December 31 (in millions)	2018		2017
Receivables, gross	$	7,392	$	7,055
Less: Allowance for doubtful accounts	99		88
Receivables, net	$	7,293	$	6,967



December 31 (in millions)	2018		2017
Noncurrent receivables (included in other noncurrent assets, net)	$	1,180	$	1,093
Noncurrent deferred revenue (included in other noncurrent liabilities)	$	481	$	392