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Investments | 12 Months Ended
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Dec. 31, 2013
Investments | Note 6: Investments
December 31 (in millions) |  | 2013 |  | 2012
Fair Value Method | $ | 4,345 | $ | 4,493
Equity Method: |  |  |  |
| The Weather Channel |  | 333 |  | 471
| Hulu |  | 187 |  | -
| Other |  | 469 |  | 693
|  |  | 989 |  | 1,164
Cost Method: |  |  |  |
| AirTouch |  | 1,553 |  | 1,538
| Other |  | 456 |  | 594
|  |  | 2,009 |  | 2,132
Total investments |  | 7,343 |  | 7,789
Less: Current investments |  | 3,573 |  | 1,464
Noncurrent investments | $ | 3,770 | $ | 6,325
Investment Income (Loss), Net |  |  |  |  |  |
Year ended December 31 (in millions) |  | 2013 |  | 2012 |  | 2011
Gains on sales and exchanges of investments, net | $ | 484 | $ | 30 | $ | 41
Investment impairment losses |  | (29) |  | (24) |  | (5)
Unrealized gains (losses) on securities underlying prepaid forward sale agreements |  | 1,601 |  | 1,159 |  | 192
Mark to market adjustments on derivative component of prepaid forward sale |  |  |  |  |  |
| agreements and indexed debt instruments |  | (1,604) |  | (1,071) |  | (119)
Interest and dividend income |  | 111 |  | 119 |  | 110
Other, net |  | 13 |  | 6 |  | (60)
Investment income (loss), net | $ | 576 | $ | 219 | $ | 159
Fair Value Method We classify publicly traded investments that are not accounted for under the equity method as available-for-sale (“AFS”) or trading securities and record them at fair value. For AFS securities, we record unrealized gains or losses resulting from changes in fair value between measurement dates as a component of other comprehensive income (loss), except when we consider declines in value to be other than temporary. For trading securities, we record unrealized gains or losses resulting from changes in fair value between measurement dates as a component of investment income (loss), net. We recognize realized gains and losses associated with our fair value method investments using the specific identification method. We classify the cash flows related to purchases of and proceeds from the sale of trading securities based on the nature of the securities and the purpose for which they were acquired. As of December 31, 2013 and 2012, the majority of our fair value method investments were equity securities that we account for as trading securities and were held as collateral related to our obligations under prepaid forward sale agreements.
Prepaid Forward Sale Agreements
December 31 (in millions) |  | 2013 |  | 2012
Assets: |  |  |  |
| Fair value equity securities held as collateral | $ | 3,959 | $ | 4,143
Liabilities: |  |  |  |
| Obligations under prepaid forward sale agreements | $ | 811 | $ | 1,248
| Derivative component of prepaid forward sale agreements |  | 2,800 |  | 2,302
Total liabilities | $ | 3,611 | $ | 3,550
During 2013, we purchased a total of $657 million of equity securities classified as trading securities and held them as collateral under our prepaid forward sale agreements. We also settled obligations under certain of our prepaid forward sale agreements totaling $1.6 billion with a combination of cash on hand and $1.4 billion of equity securities. The majority of our remaining obligations related to these investments mature in 201 4. At maturity, the counterparties are entitled to receive some or all of the equity securities, or an equivalent amount of cash at our option, based on the market value of the equity securities at that time. As of both December 31, 2013 and 2012, our prepaid forward sale obligations had an estimated fair value of $3.6 billion. The estimated fair values are based on Level 2 inputs using pricing models whose inputs are derived primarily from or corroborated by observable market data through correlation or other means for substantially the full term of the financial instrument. The derivative component of the prepaid forward sale agreements are equity derivative financial instruments embedded in the related contracts, which we use to manage our exposure to and benefits from price fluctuations in the common stock of the related investments. For these derivative financial instruments, we separate the derivative component from the host contract and record the change in its value each period to investment income (loss), net. Liberty Media In October 2013, Liberty Media Corporation (“Liberty Media”) redeemed 6.3 million shares of Liberty Media Series A common stock (“Liberty stock”) that had been held by us as collateral as of December 31, 2012 under certain of our prepaid forward sale agreements in exchange for all of the equity of a subsidiary of Liberty Media. The fair value of the Liberty stock at the date of the close of the transaction was $937 million. The assets of the subsidiary of Liberty Media included cash of $417 million, Liberty Media's interests in one of NBCUniversal's contractual obligations and a wholly owned operating subsidiary, Leisure Arts, Inc. Following the close of this transaction, we now consolidate the subsidiary transferred to us, and the liability associated with NBCUniversal's contractual obligation is eliminated in consolidation. Clearwire LLC In July 2013, in connection with Sprint Communications, Inc.'s (“Sprint”) acquisition of Clearwire Corporation (“Clearwire”), Sprint acquired our investment of 89 million Class A shares of Clearwire for $443 million. As a result, we recognized a pretax gain of $443 million in our consolidated statement of income, which represented the recognition of cumulative unrealized gains previously recorded in accumulated other comprehensive income (loss). Equity Method We use the equity method to account for investments in which we have the ability to exercise significant influence over the investee's operating and financial policies or where we hold significant partnership or LLC interests. Equity method investments are recorded at cost and are adjusted to recognize (i) our proportionate share of the investee's net income or losses after the date of investment, (ii) amortization of the recorded investment that exceeds our share of the book value of the investee's net assets, (iii) additional contributions made and dividends received and (iv) impairments resulting from other-than-temporary declines in fair value. For some investments, we record our share of the investee's net income or loss one quarter in arrears due to the timing of our receipt of such information. Gains or losses on the sale of equity method investments are recorded to other income (expense), net. If an equity method investee were to issue additional securities that would change our proportionate share of the entity, we would recognize the change, if any, as a gain or loss in our consolidated statement of income. The Weather Channel In June 2013, we received a distribution from The Weather Channel Holding Corp. (“The Weather Channel”) of $152 million, of which $128 million was recorded as a return of its investment in The Weather Channel and included under the caption “return of capital from investees” in our consolidated statement of cash flows. Hulu In July 2013, we entered into an agreement to provide capital contributions totaling $247 million to Hulu, LLC (“Hulu”), which we had previously accounted for as a cost method investment. This represented an agreement to provide our first capital contribution to Hulu since our interest was acquired as part of the NBCUniversal transaction, therefore we began to apply the equity method of accounting for this investment. The change in the method of accounting for this investment required us to recognize our proportionate share of Hulu's accumulated losses from the date of the NBCUniversal transaction through July 2013. Cost Method We use the cost method to account for investments not accounted for under the fair value method or the equity method. AirTouch Communications, Inc. We hold two series of preferred stock of AirTouch Communications, Inc. (“AirTouch”), a subsidiary of Vodafone, which are redeemable in April 2020. As of December 31, 2013 and 2012, t he estimated fair value of the AirTouch preferred stock was $1.7 billion and $1.8 billion, respectively. The dividend and redemption activity of the AirTouch preferred stock determines the dividend and redemption payments associated with substantially all of the preferred shares issued by one of our consolidated subsidiaries, which is a VIE. The subsidiary has three series of preferred stock outstanding with an aggregate redemption value of $1.75 billion. Substantially all of the preferred shares are redeemable in April 2020 at a redemption value of $1.65 billion. As of both December 31, 2013 and 2012, the two redeemable series of subsidiary preferred shares were recorded at $1.5 billion, and those amounts are included in other noncurrent liabilities. As of December 31, 2013 and 2012, these redeemable subsidiary preferred shares had an estimated fair value of $1.7 billion and $1.8 billion, respectively. The estimated fair values are based on Level 2 inputs using pricing models whose inputs are derived primarily from or corroborated by observable market data through correlation or other means for substantially the full term of the financial instrument. The one nonredeemable series of subsidiary preferred shares was recorded at $100 million as of both December 31, 2013 and 2012, and those amounts are included in noncontrolling interests in our consolidated balance sheet. The carrying amounts of the nonredeemable subsidiary preferred shares approximate their fair value. Impairment Testing of Investments We review our investment portfolio each reporting period to determine whether there are identified events or circumstances that would indicate there is a decline in the fair value that would be considered other than temporary. For our nonpublic investments, if there are no identified events or circumstances that would have a significant adverse effect on the fair value of the investment, then the fair value is not estimated. If an investment is deemed to have experienced an other-than-temporary decline below its cost basis, we reduce the carrying amount of the investment to its quoted or estimated fair value, as applicable, and establish a new cost basis for the investment. For our AFS and cost method investments, we record the impairment to investment income (loss), net. For our equity method investments, we record the impairment to other income (expense), net. During 2013, we recorded $249 million of impairment charges to our equity method investments, which were primarily related to a regional sports cable network based in Houston, Texas.
NBCUniversal Media, LLC [Member] |
Investments | Note 6: Investments
|  |  | Successor
December 31 (in millions) |  | 2013 |  | 2012
Fair Value Method | $ | 11 | $ | 21
Equity Method: |  |  |  |
| The Weather Channel |  | 333 |  | 471
| Hulu |  | 187 |  | -
| Other |  | 332 |  | 545
|  |  | 852 |  | 1,016
Cost Method |  | 21 |  | 229
Total investments | $ | 884 | $ | 1,266
Equity Method We use the equity method to account for investments in which we have the ability to exercise significant influence over the investee's operating and financial policies or where we hold significant partnership or LLC interests. Equity method investments are recorded at cost and are adjusted to recognize (i) our proportionate share of the investee's net income or losses after the date of investment, (ii) amortization of the recorded investment that exceeds our share of the book value of the investee's net assets, (iii) additional contributions made and dividends received, and (iv) impairments resulting from other-than-temporary declines in fair value. Gains or losses on the sale of equity method investments are recorded to other income (expense), net. If an equity method investee were to issue additional securities that would change our proportionate share of the entity, we would recognize the change, if any, as a gain or loss in our consolidated statement of income. The Weather Channel In June 2013, we received a distribution from The Weather Channel Holding Corp. (“The Weather Channel”) of $152 million, of which $128 million was recorded as a return of our investment in The Weather Channel and included under the caption “return of capital from investees” in our consolidated statement of cash flows. Hulu In July 2013, we entered into an agreement to provide capital contributions totaling $247 million to Hulu, LLC (“Hulu”), which we had previously accounted for as a cost method investment. This represented an agreement to provide our first capital contribution to Hulu since Comcast acquired its interest in Hulu as part of the Joint Venture transaction, therefore we began to apply the equity method of accounting for this investment. The change in the method of accounting for this investment required us to recognize our proportionate share of Hulu's accumulated losses from the date of the Joint Venture transaction through July 2013. Prior period financial statements have not been restated as the amounts are not material for the periods presented. Impairment Testing of Investments We review our investment portfolio each reporting period to determine whether there are identified events or circumstances that would indicate there is a decline in the fair value that would be considered other than temporary. For our nonpublic investments, if there are no identified events or circumstances that would have a significant adverse effect on the fair value of the investment, then the fair value is not estimated. If an investment is deemed to have experienced an other-than-temporary decline below its cost basis, we reduce the carrying amount of the investment to its quoted or estimated fair value, as applicable, and establish a new cost basis for the investment. For our AFS and cost method investments, we record the impairment to investment income (loss), net. For our equity method investments, we record the impairment to other income (expense), net. During 2013, we recorded $249 million of impairment charges to our equity method investments, which were primarily related to a regional sports cable network based in Houston, Texas.

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- Definition Includes all investments held by the company under the equity, cost and the fair value methods. Represents total on the balance sheet. Includes the components of investment income (loss), net. + References No definition available. + Details
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