v2.4.0.6
Fair Value Measurements
 3 Months Ended
Mar. 31, 2013
Fair Value Measurements [Abstract]  
Fair Value Measurements

Note 7: Fair Value Measurements

The accounting guidance related to financial assets and financial liabilities (“financial instruments”) establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). Level 1 consists of financial instruments whose values are based on quoted market prices for identical financial instruments in an active market. Level 2 consists of financial instruments that are valued using models or other valuation methodologies. These models use inputs that are observable either directly or indirectly. Level 3 consists of financial instruments whose values are determined using pricing models that use significant inputs that are primarily unobservable, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Our financial instruments that are accounted for at fair value on a recurring basis are presented in the table below.

Recurring Fair Value Measures
  Fair Value as of
  March 31, 2013 December 31, 2012
(in millions)  Level 1 Level 2 Level 3 Total  Total
Assets           
Trading securities$ 4,535$ - $ - $ 4,535 $ 4,027
Available-for-sale securities  288  99  17  404   464
Interest rate swap agreements  -   180  -   180   210
Foreign exchange contracts  -   17  -   17   6
Cross-currency swap agreements  -   -   -   -    30
Equity warrants  -   -   -   -    2
Total$ 4,823$ 296$ 17$ 5,136 $ 4,739
Liabilities           
Derivative component of prepaid forward sale agreements           
 and indexed debt instruments$ - $ 2,894$ - $ 2,894 $ 2,305
Contractual obligations  -   -   1,080  1,080   1,055
Contingent consideration  -   -   699  699   587
Cross-currency swap agreements  -   28  -   28   -
Foreign exchange contracts  -   18  -   18   14
Total$ - $ 2,940$ 1,779$ 4,719 $ 3,961

Contractual Obligations and Contingent Consideration

The fair values of the contractual obligations and contingent consideration in the table above are primarily based on certain expected future discounted cash flows, the determination of which involves the use of significant unobservable inputs. The most significant unobservable inputs we use are our estimates of the future revenue we expect to generate from certain NBCUniversal entities, which are related to our contractual obligations, and future net tax benefits that will affect payments to GE, which are related to contingent consideration. The discount rates used in the measurements of fair value were between 5% and 14% and are based on the underlying risk associated with our estimate of future revenue, as well as the terms of the respective contracts, and the uncertainty in the timing of our payments to GE. The fair value adjustments to contractual obligations and contingent consideration are sensitive to the assumptions related to future revenue and tax benefits, respectively, as well as to current interest rates, and therefore, the adjustments are recorded to other income (expense), net in our condensed consolidated statement of income.

     
Changes in Contractual Obligations and Contingent Consideration
(in millions) Contractual Obligations Contingent Consideration
Balance, December 31, 2012$ 1,055$ 587
Fair value adjustments  45  8
Payments  (20)  (67)
Redemption Transaction  -   171
Balance, March 31, 2013$ 1,080$ 699

Nonrecurring Fair Value Measures

We have assets and liabilities that we are required to record at fair value on a nonrecurring basis when certain circumstances occur. In the case of film or stage play production costs, upon the occurrence of an event or change in circumstance that may indicate that the fair value of a production is less than its unamortized costs, we determine the fair value of the production and record an adjustment for the amount by which the unamortized capitalized costs exceed the production's fair value. The estimate of fair value of a production is determined using Level 3 inputs, primarily an analysis of future expected cash flows. Adjustments to capitalized film production costs of $66 million and $25 million were recorded during the three months ended March 31, 2013 and 2012, respectively.