UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December 31, 2019~~September 30, 2020

☐
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number

001-35769

NEWS ~~CORP~~CORPORATION

~~ORATION~~

(Exact name of registrant as specified in its charter)

Delaware

46-2950970

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1211 Avenue of the Americas, New York,

New York

10036

(Address of principal executive offices)

(Zip Code)

(212) 416-3400

(Registrant’s telephone number, including area code)

~~(212)~~

~~416-3400~~

~~(Registrant’s telephone number, including area code)~~

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)		Trading Symbol(s)		Name of each exchange on which registered
Class A Common Stock, par value $0.01 per share	NWSA	~~NWSA~~		The Nasdaq Global Select Market
Class B Common Stock, par value $0.01 per share	NWS	~~NWS~~		The Nasdaq Global Select Market
Class A Preferred Stock Purchase Rights	N/A	~~N/A~~		The Nasdaq Global Select Market
Class B Preferred Stock Purchase Rights	N/A	~~N/A~~		The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§ (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

~~Non-accelerated~~

~~filer~~

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in ~~Rule~~

~~12b-2~~

Rule12b-2 of the Exchange Act). Yes

☐

☒

As of ~~January 31,~~October 30, 2020,

~~388,635,928~~

390,955,182 shares of Class A Common Stock and 199,630,240 shares of Class B Common Stock were outstanding.

Table of Contents

NEWS CORPORATION

FORM

10-Q

TABLE OF CONTENTS


							Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations for the three ~~and six~~ months ended ~~December 31,~~September 3 0 , 2020 and 2019 ~~and 2018~~ (unaudited)							2
Consolidated Statements of Comprehensive Income (Loss) for the three ~~and six~~ months ended ~~December 31,~~September 3 0 , 2020 and 2019 ~~and 2018~~ (unaudited)							3
Consolidated Balance Sheets as of ~~December 31, 2019~~September 30 , 2020 (unaudited) and June 30, ~~2019~~20 20 (audited)							4
Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~December 31,~~September 3 0 , 2020 and 2019 ~~and 2018~~ (unaudited)							5
Notes to the Unaudited Consolidated Financial Statements							6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations							3624
Item 3. Quantitative and Qualitative Disclosures About Market Risk							5438
Item 4. Controls and Procedures							5439
Part II. Other Information
Item 1. Legal Proceedings							5540
Item 1A. Risk Factors							5540
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds							5640
Item 3. Defaults Upon Senior Securities							5640
Item 4. Mine Safety Disclosures							5640
Item 5. Other Information							5640
Item 6. Exhibits							5741
Signature							5942

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS

NEWS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; millions, except per share amounts)


		For the three months ended September 30,
	Notes		2020		2019
Revenues:
Circulation and subscription			$	1,002	$	995
Advertising			332		608
Consumer			441		387
Real estate			235		218
Other			107		132
Total Revenues	2		2,117		2,340
Operating expenses			(1,164)		(1,338)
Selling, general and administrative			(685)		(781)
Depreciation and amortization			(164)		(162)
Impairment and restructuring charges	3		(40)		(297)
Equity losses of affiliates	4		(1)		(2)
Interest (expense) income, net			(8)		4
Other, net	12		17		4
Income (loss) before income tax (expense) benefit			72		(232)
Income tax (expense) benefit	10		(25)		21
Net income (loss)			47		(211)
Less: Net income attributable to noncontrolling interests			(13)		(16)
Net income (loss) attributable to News Corporation stockholders			$	34	$	(227)
Net income (loss) attributable to News Corporation stockholders per share:	8
Basic and diluted			$	0.06	$	(0.39)

For the three months
ended

For the six months
ended

December 31,

December 31,

Notes

2019

2018

2019

2018

Revenues:

Circulation and subscription
$
990
$
1,029
$
1,985
$
2,063

Advertising

677

718

1,285

1,382

Consumer

421

478

808

878

Real estate

242

248

460

475

Other

149

154

281

353

Total Revenues

2

2,479

2,627

4,819

5,151

Operating expenses

(1,350
)
(1,484
)
(2,687
)
(2,824
)
Selling, general and administrative

(774
)
(773
)
(1,556
)
(1,599
)
Depreciation and amortization

(162
)
(163
)
(324
)
(326
)
Impairment and restructuring charges

3

(29
)
(19
)
(326
)
(37
)
Equity losses of affiliates

4

(3
)
(6
)
(5
)
(9
)
Interest expense, net

(8
)
(15
)
(4
)
(31
)
Other, net

1
3

2

7

6

27

Income (loss) before income tax expense

155

174

(77
)
352

Income tax expense

1
1

(52
)
(55
)
(31
)
(105
)

Net income (loss)

103

119

(108
)
247

Less: Net income attributable to noncontrolling interests

(18
)
(24
)
(34
)
(51
)

Net income (loss) attributable to News Corporation stockholders
$
85
$
95
$
(142
) $
196

Net income (loss) attributable to News Corporation stockholders per share:

9

Basic
$
0.15
$
0.16
$
(0.24
) $
0.34

Diluted
$
0.14
$
0.16
$
(0.24
) $
0.33

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

NEWS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited; millions)


	For the three months ended						For the six months ended
	December 31,						December 31,							For the three months ended September 30,
	2019			2018			2019			2018					2020		2019
Net income (loss)	$	103		$	119		$	(108	)	$	247		Net income (loss)		$	47	$	(211)
Other comprehensive income (loss):													Other comprehensive income (loss):
Foreign currency translation adjustments		199			(147	)		14			(257	)	Foreign currency translation adjustments		107		(185)
Net change in the fair value of cash flow hedges (a)		—			5			(14	)		7		Net change in the fair value of cash flow hedges(a)		(2)		(14)
Benefit plan adjustments, net (b)		(13	)		8			(2	)		13		Benefit plan adjustments, net(b)		8		11

Other comprehensive income (loss)		186			(134	)		(2	)		(237	)	Other comprehensive income (loss)		113		(188)

Comprehensive income (loss)		289			(15	)		(110	)		10		Comprehensive income (loss)		160		(399)
Less: Net income attributable to noncontrolling interests		(18	)		(24	)		(34	)		(51	)	Less: Net income attributable to noncontrolling interests		(13)		(16)
Less: Other comprehensive (income) loss attributable to noncontrolling interests		(36	)		28			9			56		Less: Other comprehensive (income) loss attributable to noncontrolling interests		(17)		45

Comprehensive income (loss) attributable to News Corporation stockholders	$	235		$	(11	)	$	(135	)	$	15		Comprehensive income (loss) attributable to News Corporation stockholders		$	130	$	(370)

(a) Net of income tax benefit of NaN and $3 million for the three months ended September 30, 2020 and 2019, respectively.

(b) Net of income tax expense of $3 million for both the three months ended September 30, 2020 and 2019.

~~(a)~~

Net of income tax benefit of NaN for the three months ended December 31, 2019 and 2018, respectively, and income tax (benefit) expense of ($3) million and $1 million for the six months ended December 31, 2019 and 2018, respectively.

~~(b)~~

Net of income tax (benefit) expense of ($4) million and $2 million for the three months ended December 31, 2019 and 2018, respectively, and income tax (benefit) expense of ($1) million and $3 million for the six months ended December 31, 2019 and 2018, respectively.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

NEWS CORPORATION

CONSOLIDATED BALANCE SHEETS

(Millions, except share and per share amounts)

			As of			As of
	Notes		December 31, 2019			June 30, 2019				Notes	As of September 30, 2020		As of June 30, 2020
			(unaudited)			(audited)					(unaudited)		(audited)
Assets:									Assets:
Current assets:									Current assets:
Cash and cash equivalents			$	1,272		$	1,643		Cash and cash equivalents		$	1,539	$	1,517
Receivables, net		1 3		1,570			1,544		Receivables, net	12	1,240		1,203
Inventory, net				358			348		Inventory, net		203		348
Other current assets				518			515		Other current assets		453		393

Total current assets				3,718			4,050		Total current assets		3,435		3,461

Non-current assets:									Non-current assets:
Investments		4		325			335		Investments	4	314		297
Property, plant and equipment, net				2,476			2,554		Property, plant and equipment, net		2,225		2,256
Operating lease right-of-use assets		6		1,299			—		Operating lease right-of-use assets		1,048		1,061
Intangible assets, net				2,257			2,426		Intangible assets, net		1,869		1,864
Goodwill				4,976			5,147		Goodwill		3,997		3,951
Deferred income tax assets		11		283			269		Deferred income tax assets	10	337		332
Other non-current assets		1 3		948			930		Other non-current assets	12	1,175		1,039

Total assets			$	16,282		$	15,711		Total assets		$	14,400	$	14,261

Liabilities and Equity:									Liabilities and Equity:
Current liabilities:									Current liabilities:
Accounts payable			$	375		$	411		Accounts payable		$	322	$	351
Accrued expenses				1,072			1,328		Accrued expenses		1,060		1,019
Deferred revenue		2		411			428		Deferred revenue	2	409		398
Current borrowings		5		—			449		Current borrowings	5	78		76
Other current liabilities		1 3		869			724		Other current liabilities	12	869		838

Total current liabilities				2,727			3,340		Total current liabilities		2,738		2,682

Non-current liabilities:									Non-current liabilities:
Borrowings		5		1,201			1,004		Borrowings	5	1,206		1,183
Retirement benefit obligations				258			266		Retirement benefit obligations		260		277
Deferred income tax liabilities		1 1		268			295		Deferred income tax liabilities	10	263		258
Operating lease liabilities		6		1,343			—		Operating lease liabilities		1,135		1,146
Other non-current liabilities				358			495		Other non-current liabilities		344		326
Commitments and contingencies		1 0							Commitments and contingencies	9
Class A common stock (a)				4			4		Class A common stock(a)		4		4
Class B common stock (b)				2			2		Class B common stock(b)		2		2
Additional paid-in capital				12,183			12,243		Additional paid-in capital		12,075		12,148
Accumulated deficit				(2,114	)		(1,979	)	Accumulated deficit		(3,207)		(3,241)
Accumulated other comprehensive loss				(1,117	)		(1,126	)	Accumulated other comprehensive loss		(1,235)		(1,331)

Total News Corporation stockholders’ equity				8,958			9,144		Total News Corporation stockholders’ equity		7,639		7,582
Noncontrolling interests				1,169			1,167		Noncontrolling interests		815		807

Total equity		7		10,127			10,311		Total equity	6	8,454		8,389

Total liabilities and equity			$	16,282		$	15,711		Total liabilities and equity		$	14,400	$	14,261

(a) Class A common stock, $0.01 par value per share (“Class A Common Stock”), 1,500,000,000 shares authorized, 390,954,837 and 388,922,752 shares issued and outstanding, net of 27,368,413 treasury shares at par at September 30, 2020 and June 30, 2020, respectively.

(b) Class B common stock, $0.01 par value per share (“Class B Common Stock”), 750,000,000 shares authorized, 199,630,240 shares issued and outstanding, net of 78,430,424 treasury shares at par at September 30, 2020 and June 30, 2020, respectively.

~~(a)~~

~~Class A common stock~~

, $0.01 par value per share (“Class A Common Stock”), 1,500,000,000 shares authorized, 388,601,457 and 385,580,015 shares issued and outstanding, net of 27,368,413 treasury shares at par at December 31, 2019 and June 30, 2019, respectively.

~~(b)~~

~~Class B common stock~~

, $0.01 par value per share (“Class B Common Stock”), 750,000,000 shares authorized, 199,630,240 shares issued and outstanding, net of 78,430,424 treasury shares at par at December 31, 2019 and June 30, 2019, respectively

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

NEWS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; millions)


		For the three months ended September 30,
	Notes	2020		2019
Operating activities:
Net income (loss)		$	47	$	(211)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		164		162
Operating lease expense		32		43
Equity losses of affiliates	4	1		2
Cash distributions received from affiliates		4		2
Impairment charges		0		273
Other, net	12	(17)		(4)
Deferred income taxes and taxes payable	10	10		(45)
Change in operating assets and liabilities, net of acquisitions:
Receivables and other assets		(46)		(1,551)
Inventories, net		2		(72)
Accounts payable and other liabilities		(42)		1,428
Net cash provided by operating activities		155		27
Investing activities:
Capital expenditures		(93)		(117)
Acquisitions, net of cash acquired		(1)		0
Investments in equity affiliates and other		(7)		(5)

Proceeds from property, plant and equipment and other asset dispositions		2		3
Other, net		3		1
Net cash used in investing activities		(96)		(118)
Financing activities:
Borrowings	5	123		199
Repayment of borrowings	5	(119)		(290)
Dividends paid		(20)		(22)
Other, net		(34)		18
Net cash used in financing activities		(50)		(95)
Net change in cash and cash equivalents		9		(186)

Cash and cash equivalents, beginning of period		1,517		1,643
Exchange movement on opening cash balance		13		(16)
Cash and cash equivalents, end of period		$	1,539	$	1,441

For the six months ended

December 31,

Notes

2019

2018

Operating activities:

Net (loss) income
$
(108
) $
247

Adjustments to reconcile net (loss) income to cash provided by operating activities:

Depreciation and amortization

324

326

Operating lease expense

6

86

—

Equity losses of affiliates

4
5
9
Cash distributions received from affiliates

5

27

Impairment charges

3

292

—

Other, net

13

(6
)
(27
)
Deferred income taxes and taxes payable

11

(35
)
40

Change in operating assets and liabilities, net of acquisitions:

Receivables and other assets

(1,661
)
(140
)
Inventories, net

3

(43
)
Accounts payable and other liabilities

1,287

(81
)

Net cash provided by operating activities

192

358

Investing activities:

Capital expenditures

(237
)
(264
)
Acquisitions, net of cash acquired

(2
)
(185
)
Investments in equity affiliates and other

(8
)
(13
)
Proceeds from business dispositions

—

5

Proceeds from property, plant and equipment and other asset dispositions

10

32

Other, net

3

16

Net cash used in investing activities

(234
)
(409
)

Financing activities:

Borrowings

5

917

263

Repayment of borrowings

5

(1,161
)
(470
)
Dividends paid

(81
)
(81
)
Other, net

(3
)
(45
)

Net cash used in financing activities

(328
)
(333
)

Net change in cash and cash equivalents

(370
)
(384
)
Cash and cash equivalents, beginning of year

1,643

2,034

Exchange movement on opening cash balance

(1
)
(32
)

Cash and cash equivalents, end of year
$
1,272
$
1,618

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

News Corporation (together with its subsidiaries, “News Corporation,” “News Corp,” the “Company,” ~~“we,”~~“we” or “us”) is a global diversified media and information services company comprised of businesses across a range of media, including: ~~news and information~~digital real estate services, subscription video services in Australia, news and information services and book ~~publishing~~publishing.

During the fourth quarter of fiscal 2020, in connection with the Company's sale of its News America Marketing reporting unit and ~~digital real estate services.~~its annual review of its reportable segments, the Company determined to disaggregate its Dow Jones operating segment as a separate reportable segment in accordance with Accounting Standard Codification (“ASC”) 280, “Segment Reporting.” Previously, the financial information for this operating segment was aggregated with the businesses within the News Media operating segment and, together, formed the News and Information Services reportable segment. Following the sale of its News America Marketing business in the fourth quarter of fiscal 2020 and in conjunction with the Company’s annual budgeting process, the Company determined that aggregation was no longer appropriate as certain of the remaining businesses no longer shared similar economic characteristics. As a result, the Company has revised its historical disclosures for the prior period to reflect the new Dow Jones and News Media reportable segments.

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company, which are referred to herein as the “Consolidated Financial Statements,” have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form

10-Q

and Article 10 of Regulation

S-X.

In the opinion of management, all adjustments consisting only of normal recurring adjustments necessary for a fair presentation have been reflected in these Consolidated Financial Statements. Operating results for the interim period presented are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, ~~2020.~~2021. The preparation of the Company’s Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts that are reported in the Consolidated Financial Statements and accompanying disclosures. The business and economic uncertainty resulting from the impacts of the ongoing novel coronavirus (“COVID-19”) pandemic has been considered in making those estimates and assumptions. Actual results could differ from those estimates.

Intercompany transactions and balances have been eliminated. Equity investments in which the Company exercises significant influence but does not exercise control and is not the primary beneficiary are accounted for using the equity method. Investments in which the Company is not able to exercise significant influence over the investee are measured at fair value, if the fair value is readily determinable. If an investment’s fair value is not readily determinable, the Company will measure the investment at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.

The consolidated statements of operations are referred to herein as the “Statements of Operations.” The consolidated balance sheets are referred to herein as the “Balance Sheets.” The consolidated statements of cash flows are referred to herein as the “Statements of Cash Flows.”

The accompanying Consolidated Financial Statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form

10-K

for the fiscal year ended June 30, ~~2019~~2020 as filed with the Securities and Exchange Commission (the “SEC”) on August ~~13, 2019~~11, 2020 (the ~~“2019~~“2020 Form

10-K”).

Certain reclassifications have been made to the prior period consolidated financial statements to conform to the current year presentation. Specifically, the Company reclassified certain costs at the ~~costs associated with certain initiatives~~Other segment that were previously included within the Other segment to the News and Information Services segment as these initiatives directly benefit this segment. For the three and six months ended December 31, 2018, these reclassifications increased Selling, general and administrative to Operating expenses. For the three months ended September 30, 2019, these reclassifications increased Operating expenses by ~~$8 million and $15 million, respectively, for the News and Information Services segment.~~$1 million.

The Company’s fiscal year ends on the Sunday closest to June 30. Fiscal ~~2020~~2021 and fiscal ~~2019~~2020 include 52 weeks.weeks. All references to the three ~~and six~~ months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ relate to the three ~~and six~~ months ended ~~December~~September 27, 2020 and September 29, 2019, ~~and December 30, 2018,~~ respectively. For convenience purposes, the Company continues to date its Consolidated Financial Statements as of ~~December 31.~~

September 30.

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Recently Issued Accounting Pronouncements

Adopted

In ~~February~~June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

~~2016-02,~~

~~“Leases (Topic 842)” (“ASU~~

~~2016-02”).~~

~~The amendments in ASU~~

~~2016-02~~

~~require lessees to recognize all leases on the balance sheet by recording a~~

~~right-of-use~~

asset and a lease liability, and lessor accounting has been updated to align with the new requirements for lessees. The FASB also issued additional standards which provide clarification and implementation

~~guidance, and have the same effective date as ASU~~

~~2016-02.~~

~~The Company adopted ASU~~

~~2016-02~~

~~on a modified retrospective basis as of July~~

~~2019~~

~~. As a result of the adoption, the Company recorded operating lease~~

~~right-of-use~~

~~assets, current lease liabilities and noncurrent lease liabilities for its operating leases of approximately $~~

~~1.4~~

~~billion, $~~

~~0.2~~

~~billion and~~

~~$1.4 billion, respectively, on July 1,~~

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~2019. The Company also recorded a $~~

~~million adjustment related to previous sale leaseback transactions, which decreased the Accumulated deficit balance as of July 1, 2019. The Company’s adoption of ASU~~

~~2016-02~~

~~also resulted in the reclassification of prepaid and deferred rent to Operating lease~~

~~right-of-use~~

~~assets. See Note 6—Leases.~~

~~In August 2017, the FASB issued ASU~~

~~2017-12,~~

~~“Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU~~

~~2017-12”).~~

~~The amendments in ASU~~

~~2017-12~~

more closely align the results of cash flow and fair value hedge accounting with risk management activities through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. The amendments address specific limitations in current GAAP by expanding hedge accounting for both nonfinancial and financial risk components and by refining the measurement of hedge results to better reflect an entity’s hedging strategies. ASU

~~2017-12~~

is effective for the Company for annual and interim reporting periods beginning July 1, 2019. The Company adopted the guidance on a cumulative-effect basis for its outstanding cash flow hedges that qualified for hedge accounting as of July 1, 2019. The adoption did not have a material impact on the Company’s Consolidated Financial Statements.

~~In February 2018, the FASB issued ASU~~

~~2018-02,~~

~~“Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU~~

~~2018-02”).~~

~~The amendments in ASU~~

~~2018-02~~

~~provide a reclassification from Accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”). ASU~~

~~2018-02~~

is effective for the Company for annual and interim reporting periods beginning July 1, 2019. The Company adopted the guidance as of July 1, 2019 and elected to not reclassify the stranded tax effects resulting from the Tax Act from Accumulated other comprehensive loss to Accumulated deficit. The adoption did not have a material impact on the Company’s Consolidated Financial Statements.

~~In April 2019, the FASB issued ASU~~

~~2019-04,~~

~~“Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” (“ASU~~

~~2019-04”).~~

~~The amendments in ASU~~

~~2019-04~~

~~clarify certain aspects of accounting for credit losses, hedging activities and financial instruments. For entities that have adopted ASU~~

~~2017-12,~~

~~the effective date and transition requirements for ASU~~

~~2019-04~~

~~are the same as the effective date and transition requirements for ASU~~

~~2017-12.~~

~~For entities that have adopted ASU~~

~~2016-01,~~

~~“Financial Instruments—Overall (Subtopic~~

~~825-10):~~

~~Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU~~

~~2016-01”),~~

~~ASU~~

~~2019-04~~

is effective for annual and interim reporting periods beginning July 1, 2020 and early adoption is permitted. For clarifications around credit losses, the effective date will be the same as the effective date in ASU

2016-13,

~~(described below)~~

~~The Company adopted the amendments in ASU~~

~~2019-04~~

~~related to ASU~~

~~2017-12~~

~~and ASU~~

~~2016-01~~

~~as of July 1, 2019. The adoption did not have a material impact on the Company’s Consolidated Financial Statements.~~

~~Issued~~

~~In June 2016, the FASB issued ASU~~

~~2016-13,~~

~~“Financial~~ “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). The amendments in ASU

2016-13

require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The Company adopted the amendments in ASU

2016-13

~~must be adopted~~ on a ~~modified-retrospective~~

modified retrospective basis

~~and is effective for the Company for annual and interim reporting periods beginning~~ as of July 1, ~~2020.~~2020 and the adoption did not have a material effect on the Company's Consolidated Financial Statements. The Company ~~is currently evaluating~~will continue to actively monitor the impact ~~ASU~~

~~2016-13~~

~~will have~~of COVID-19 on ~~its Consolidated~~expected credit losses.

Allowance for doubtful accounts is calculated by pooling receivables with similar credit risks such as the level of delinquency, types of products or services and geographical locations and reflects the Company’s expected credit losses based on historical experience as well as current and expected economic conditions. Refer to Note 12—Additional Financial ~~Statements.~~Information for further discussion.

In August 2018, the FASB issued ASU

2018-13,

~~“Fair~~ “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU

2018-13”).

ASU

2018-13

removes, modifies and adds certain disclosure requirements in Topic 820, “Fair Value Measurement.” ASU

2018-13

eliminates certain disclosures related to transfers and the valuation process, modifies disclosures for investments that are valued based on net asset value, clarifies the measurement uncertainty disclosure, and requires additional disclosures for Level 3 fair value measurements. The Company adopted the amendments ~~in ASU~~

~~2018-13~~

~~related~~ to disclosure requirements ~~must be applied prospectively and all other amendments must be applied retrospectively.~~in ASU

2018-13

~~is effective for the Company for annual and interim reporting periods beginning~~ on a prospective basis as of July 1, 2020. The ~~Company is currently evaluating~~adoption did not have a material effect on the ~~impact ASU~~

~~2018-13~~

~~will have on its~~Company's Consolidated Financial Statements.

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

In March 2019, the FASB issued ASU

2019-02,

~~“Entertainment—~~ “Entertainment—Films—Other Assets—Film Costs (Subtopic

926-20)

and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic

920-350):

Improvements to Accounting for Costs of Films and License Agreements for Program Materials (a consensus of the Emerging Issues Task Force)” (“ASU

2019-02”).

The amendments in ASU

2019-02

align the impairment model in Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic

920-350)

with the fair value model in Entertainment—Films—Other Assets—Film Costs (Subtopic

926-20).

The Company adopted the amendments in ASU

2019-02

~~must be adopted~~ on a prospective basis ~~and is effective for the Company for annual and interim reporting periods beginning~~as of July 1, ~~2020, with early~~2020. The adoption ~~permitted. The Company is currently evaluating~~did not have a material effect on the ~~impact ASU~~

~~2019-02~~

~~will have on its~~Company's Consolidated Financial Statements. Refer to Note 12—Additional Financial Information for further discussion.

Issued

In December 2019, the FASB issued ASU

2019-12,

~~“Income~~ “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU

2019-12”).

The amendments in ASU

2019-12

remove certain exceptions to the general principles in Topic 740 and simplify other areas of Topic 740 including the accounting for and recognition of intraperiod tax allocation, deferred tax liabilities for outside basis differences for certain foreign subsidiaries,

year-to-date

losses in interim periods, deferred tax assets for

~~oodwill~~ goodwill in business combinations and franchise taxes in income tax expense. ASU

2019-12

is effective for the Company for annual and interim reporting periods beginning July 1, 2021, with early adoption permitted. The Company is currently evaluating the impact ASU

2019-12

will have on its Consolidated Financial Statements.

~~NOTE 2. REVENUES~~7

~~The following tables presents the Company’s disaggregated revenues for the three and six months ended December 31, 2019 and 2018:~~

For the three months ended December 31, 2019

News and
Information
Services

Subscription
Video
Services

Book
Publishing

Digital Real
Estate
Services

Other

Total
Revenues

(in millions)

Revenues:

Circulation and subscription
$
541
$
439
$
—
$
9
$
1
$
990

Advertising

599

53

—

25

—

677

Consumer

—

—

421

—

—

421

Real estate

—

—

—

242

—

242

Other

101

9

21

18

—

149

Total Revenues
$
1,241
$
501
$
442
$
294
$
1
$
2,479

For the three months ended December 31, 2018

News and
Information
Services

Subscription
Video
Services

Book
Publishing

Digital Real
Estate
Services

Other

Total
Revenues

(in millions)

Revenues:

Circulation and subscription
$
526
$
490
$
—
$
13
$
—
$
1,029

Advertising

632

55

—

31

—

718

Consumer

—

—

478

—

—

478

Real estate

—

—

—

248

—

248

Other

99

17

18

19

1

154

Total Revenues
$
1,257
$
562
$
496
$
311
$
1
$
2,627

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended December 31, 2019

News and
Information
Services

Subscription
Video
Services

Book
Publishing

Digital Real
Estate
Services

Other

Total
Revenues

(in millions)

Revenues:

Circulation and subscription
$
1,075
$
890
$
—
$
19
$

1
$
1,985

Advertising

1,129

104

—

52

—

1,285

Consumer

—

—

808

—

—

808

Real estate

—

—

—

460

—

460

Other

186

21

39

35

—

281

Total Revenues
$
2,390
$
1,015
$
847
$
566
$
1
$
4,819

NOTE 2. REVENUES

The following tables present the Company’s disaggregated revenues by type and segment for the three months ended September 30, 2020 and 2019:


	For the three months ended September 30, 2020
	Digital Real Estate Services		Subscription Video Services		Dow Jones		Book Publishing		News Media		Total Revenues
	(in millions)
Revenues:
Circulation and subscription	$	8	$	437	$	311	$	0	$	246	$	1,002
Advertising	28		50		70		0		184		332
Consumer	0		0		0		441		0		441
Real estate	235		0		0		0		0		235
Other	19		9		5		17		57		107
Total Revenues	$	290	$	496	$	386	$	458	$	487	$	2,117


	For the three months ended September 30, 2019
	Digital Real Estate Services		Subscription Video Services		Dow Jones		Book Publishing		News Media		Total Revenues
	(in millions)
Revenues:
Circulation and subscription	$	10	$	451	$	289	$	0	$	245	$	995
Advertising	27		51		84		0		446		608
Consumer	0		0		0		387		0		387
Real estate	218		0		0		0		0		218
Other	17		12		9		18		76		132
Total Revenues	$	272	$	514	$	382	$	405	$	767	$	2,340

For the six months ended December 31, 2018

News and
Information
Services

Subscription
Video
Services

Book
Publishing

Digital Real
Estate
Services

Other

Total
Revenues

(in millions)

Revenues:

Circulation and subscription
$
1,055
$
981
$
—
$
27
$
—
$
2,063

Advertising

1,208

112

—

62

—

1,382

Consumer

—

—

878

—

—

878

Real estate

—

—

—

475

—

475

Other

242

34

36

40

1

353

Total Revenues
$
2,505
$
1,127
$
914
$
604
$
1
$
5,151

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

Contract liabilities and assets

The Company’s deferred revenue balance primarily relates to amounts received from customers for subscriptions paid in advance of the services being provided. The following table presents changes in the deferred revenue balance for the three ~~and six~~ months ended ~~December 31,~~September 30, 2020 and 2019:


	For the three months ended September 30,
		2020		2019
		(in millions)
Balance, beginning of period		$	398	$	428
Deferral of revenue		707		821
Recognition of deferred revenue(a)		(701)		(794)
Other		5		(7)
Balance, end of period		$	409	$	448

(a)For the three months ended September 30, 2020 and 2019, the Company recognized $257 million and ~~2018:~~$266 million, respectively, of revenue which was included in the opening deferred revenue balance.

For the three months
ended
December 31,

For the six months
ended
December 31,

2019

2018

2019

2018

Balance, beginning of period
$
448
$
436
$
428
$
510

Deferral of revenue

754

742

1,575

1,337

Recognition of deferred revenue
(a)

(797
)
(747
)
(1,591
)
(1,417
)
Other

6

(1
)
(1
)
—

Balance, end of period
$
411
$
430
$
411
$
430

~~(a)~~

For the three and six months ended December 31, 2019, the Company recognized approximately $232 million and $329 million, respectively, of revenue which was included in the opening deferred revenue balance. For the three and six months ended December 31, 2018, the Company recognized $267 million and $421 million, respectively, of revenue which was included in the opening deferred revenue balance.

Contract assets were immaterial for disclosure as of ~~December 31, 2019~~September 30, 2020 and ~~2018.~~

2019.

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Other revenue disclosures

The Company typically expenses sales commissions incurred to obtain a customer contract as those amounts are incurred as the amortization period is ~~twelve~~12 months or less. These costs are recorded within Selling, general and administrative in the Statements of Operations. The Company also does not capitalize significant financing components when the transfer of the good or service is paid within ~~twelve~~12 months or less, or the receipt of consideration is received within ~~twelve~~12 months or less of the transfer of the good or service.

For

the three ~~and six~~ months ended ~~December 31, 2019~~

September 30, 2020, the Company recognized approximately ~~$74~~$97 million

~~and $154 million, respectively,~~

in revenues related to performance obligations that were satisfied or partially satisfied in a prior reporting period.

The remaining transaction price related to unsatisfied performance obligations as of ~~December 31, 2019~~September 30, 2020 was approximately ~~$543~~$458 million, of which approximately ~~$111~~$175 million is expected to be recognized over the remainder of fiscal ~~2020, approximately $196 million is expected to be recognized in fiscal~~ 2021, approximately ~~$87~~$119 million is expected to be recognized in fiscal 2022 and approximately ~~$36~~$45 million is expected to be recognized in fiscal 2023, with the remainder to be recognized thereafter. These amounts do not include (i) contracts with an expected duration of one year or less, (ii) contracts for which variable consideration is determined based on the customer’s subsequent sale or usage and (iii) variable consideration allocated to performance obligations accounted for under the series guidance that meets the allocation objective under ASC ~~606.~~

606, “Revenue From Contracts With Customers”.

NOTE ~~3. IMPAIRMENT AND~~3 . RESTRUCTURING ~~CHARGES~~

PROGRAMS

~~Fiscal 2020~~Restructuring

During the three months ended ~~December 31, 2019, the Company recognized a~~

~~non-cash~~

~~impairment charge of~~

~~$19 million~~

~~related to a reporting unit in the News~~September 30, 2020 and ~~Information Services segment.~~

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~During the six months ended December 31, 2019, the Company recognized~~

~~non-cash~~

impairment charges of $292 million, primarily related to the impairment of goodwill and indefinite-lived intangible assets at the News America Marketing reporting unit. As a result of the Company’s continued review of strategic options for the News America Marketing business, and other market indicators, the Company determined that the fair value of the reporting unit was less than its carrying value. As a result, the Company recorded a $122 million

~~non-cash~~

~~impairment charge to goodwill and a $113 million~~

~~non-cash~~

~~impairment charge to intangible assets. The assumptions utilized in the income approach valuation method for News America Marketing were~~

~~discount rates (ranging from~~

~~17.0%-18.5%)~~

~~and long-term growth rates (ranging from~~

~~0.6%-1.5%).~~

~~During the three and six months ended December 31,~~ 2019, the Company recorded restructuring charges of ~~$10~~$40 million and ~~$34~~$24 million, respectively, of which $7$31 million and ~~$26~~$18 million, respectively, related to the News ~~and Information Services~~Media segment. The restructuring charges recorded in fiscal 2021 primarily relate to exit costs associated with the anticipated closure of the Company’s Bronx print plant. In September 2020, the Company announced that it plans to close the plant and shift the printing of those publications in New York to a third party facility during the third quarter of fiscal 2021. Restructuring charges in fiscal 2020 were for employee termination benefits.

~~Fiscal 2019~~

During the three and six months ended December 31, 2018, the Company recorded restructuring charges of $19 million and $37 million, respectively, of which $15 million and $32 million, respectively, related to the News and Information Services segment. The restructuring charges recorded in fiscal 2019 were for employee termination benefits.

Changes in restructuring program liabilities were as follows:

For the three months ended December 31,

2019

2018

One time

One time

employee

Facility

employee

Facility

termination

related

termination

related

benefits

costs

Other costs

Total

benefits

costs

Other costs

Total

(in millions)

Balance, beginning of period
$
22
$
—
$
10
$
32
$
23
$
2
$
11
$
36

Additions

10

—

—

10

19

—

—

19

Payments

(17
)
—

(1
)
(18
)
(21
)
—

—

(21
)
Other

1

—

—

1

(1
)
—

—

(1
)

Balance, end of period
$
16
$
—
$
9
$
25
$
20
$
2
$
11
$
33

For the six months ended December 31,

2019

2018

One time

One time

employee

Facility

employee

Facility

termination

related

termination

related

benefits

costs

Other costs

Total

benefits

��
costs

Other costs

Total

(in millions)

Balance, beginning of period
$
28
$
2
$
10
$
40
$
29
$
2
$
11
$
42

Additions

34

—

—

34

37

—

—

37

Payments

(46
)
—

(1
)
(47
)
(44
)
—

(1
)
(45
)
Other

—

(2
)
—

(2
)
(2
)
—

1

(1
)

Balance, end of period
$
16
$
—
$
9
$
25
$
20
$
2
$
11
$
33


	For the three months ended September 30,
	2020				2019
	One time employee termination benefits		Other costs		Total		One time employee termination benefits		Facility related costs		Other costs		Total
	(in millions)
Balance, beginning of period	$	64	$	9	$	73	$	28	$	2	$	10	$	40
Additions	19		21		40		24		0		0		24
Payments	(48)		0		(48)		(29)		0		0		(29)
Other	(1)		0		(1)		(1)		(2)		0		(3)
Balance, end of period	$	34	$	30	$	64	$	22	$	0	$	10	$	32

As of ~~December 31, 2019,~~September 30, 2020, restructuring liabilities of approximately ~~$16~~$35 million were included in the Balance Sheet in Other current liabilities and $9$29 million were included in Other

non-current

liabilities.

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

NOTE

. 4. INVESTMENTS

The Company’s investments were comprised of the following:


	Ownership Percentage as of December 31, 2019		As of December 31, 2019		As of June 30, 2019			Ownership Percentage as of September 30, 2020	As of September 30, 2020		As of June 30, 2020
			(in millions)						(in millions)
Equity method investments (a)		various	$	139	$	148	Equity method investments(a)	various	$	117	$	120
Equity securities (b)		various		186		187	Equity securities(b)	various	197		177

Total Investments			$	325	$	335	Total Investments		$	314	$	297

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(a)Equity method investments are primarily comprised of Foxtel’s investment in Nickelodeon Australia Joint Venture and Elara Technologies Pte. Ltd. (“Elara”), which operates PropTiger.com and Housing.com.

(b)Equity securities are primarily comprised of certain investments in China and the Company’s investment in HT&E Limited, which operates a portfolio of Australian radio and outdoor media assets.

~~(a)~~

Equity method investments are primarily comprised of Foxtel’s investment in Nickelodeon Australia Joint Venture and Elara Technologies Pte. Ltd. (“Elara”), which operates PropTiger.com, Makaan.com and Housing.com.

~~(b)~~

~~Equity securities are primarily comprised of certain investments in China and the Company’s investment in HT&E Limited, which operates a portfolio of Australian radio and outdoor media assets.~~

The Company has equity securities with quoted prices in active markets as well as equity securities without readily determinable fair market values. Equity securities without readily determinable fair market values are valued at cost, less any impairment, plus or minus changes in fair value resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The components comprising total gains and losses on equity securities are set forth below:


	For the three months ended September 30,
		2020		2019
	(in millions)
Total gains recognized on equity securities		$	9	$	1
Less: Net gains recognized on equity securities sold		0		0
Unrealized gains recognized on equity securities held at end of period		$	9	$	1

For the three months
ended
December 31,

For the six months
ended
December 31,

2019

2018

2019

2018

(in millions)

(in millions)

Total losses recognized on equity securities
$
(6
) $
(44
) $
(5
) $
(29
)
Less: Net gains recognized on equity securities sold

—

—

—

—

Unrealized losses recognized on equity securities held at end of period
$
(6
) $
(44
) $
(5
) $
(29
)

Equity Losses of Affiliates

The Company’s share of the losses of its equity affiliates was $3$1 million and $5$2 million for the three ~~and six~~ months ended ~~December 31,~~September 30, 2020 and 2019, ~~respectively, and $6 million and $9 million,~~

~~respe~~

~~ctively~~

~~for the corresponding periods of fiscal 2019.~~

~~Table of Contents~~

respectively.

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

NOTE

. 5. BORROWINGS

The Company’s total borrowings consist of the ~~foll~~

~~wing:~~

Interest rate
at
December 31,
2019

Maturity at

December 31,
2019

As of
December 31,
2019

As of
June 30,
2019

(in millions)

Foxtel Group

Credit facility 2014 — tranche 2
(a)

—

Jan 31, 2020
$
—
$
56

Credit facility 2015
(a)

—

Jul 31, 2020

—

281

Credit facility 2016
(a)

—

Sept 11, 2021

—

193

Credit facility 2019
(b)

(c)

3.94 %
Nov 22, 2022

425

—

Term loan facility 2019
(d)

6.25 %
Nov 22, 2024

174

—

Working capital facility 201
7

(a) (c)

(e)

(f)

3.90
%
Nov 22, 2022

12

56

US private placement 2009 — tranche 3
(
g
)

—

Sept 24, 2019

—

75

US private placement 2012 — USD portion — tranche 1
(
g
)

—

Jul 25, 2019

—

150

US private placement 2012 — USD portion — tranche 2
(
h
)

4.27
%
Jul 25, 2022

199

199

US private placement 2012 — USD portion — tranche 3
(
h
)

4.42
%
Jul 25, 2024

148

149

US private placement 2012 — AUD portion

7.04
%
Jul 25, 2022

75

77

REA Group

Credit facility 2016 — tranche 3
(
i
)

—

Dec 31, 2019

—

168

Credit facility 2018
(
j
)

1.93
%
Apr 27, 2021

49

49

Credit facility 2019
(j)

(k)

1.95 %
Dec 2, 2021
119 —
Total borrowings

1,201

1,453

Less: current portion
(
l
)

—

(449
)

Long-term borrowings
$
1,201
$
1,004

following:


	Interest rate at September 30, 2020		Maturity at September 30, 2020	As of September 30, 2020		As of June 30, 2020
				(in millions)
Foxtel Group
Credit facility 2019(a) (c)	3.15	%	Nov 22, 2022	$	383	$	371
Term loan facility 2019(b)	6.25	%	Nov 22, 2024	176		171
Working capital facility 2017(a) (c)	3.15	%	Nov 22, 2022	0		0
Telstra Facility(d)	7.90	%	Dec 22, 2027	22		11
US private placement 2012 — USD portion — tranche 2(e)	4.27	%	Jul 25, 2022	197		200
US private placement 2012 — USD portion — tranche 3(e)	4.42	%	Jul 25, 2024	148		150
US private placement 2012 — AUD portion	7.04	%	Jul 25, 2022	74		73
REA Group
Credit facility 2018(f)	0.99	%	Apr 27, 2021	49		48
Credit facility 2019(g)	0.99	%	Dec 2, 2021	120		117
Credit facility 2020(h)	2.14	%	Dec 2, 2021	0		0
Finance lease and other liabilities				115		118
Total borrowings(i)				1,284		1,259
Less: current portion(j)				(78)		(76)
Long-term borrowings				$	1,206	$	1,183

~~(a)~~	During November 2019, certain subsidiaries of NXE Australia Pty Limited (“Foxtel” and together with such subsidiaries, the “Foxtel Debt Group”) repaid the outstanding borrowings under these facilities using a combination of new indebtedness and an ~~A$200 million shareholder loan provided by the Company.~~
~~(b)~~	~~During November 2019, the Foxtel Debt Group entered into an A$610 million revolving credit facility maturing in~~ (a)~~November 2022~~ ~~(the “2019~~ ~~Credit~~ ~~Facility”).~~
~~(c)~~	Borrowings under these facilities ~~bear interest at a floating rate of~~ ~~the~~ ~~Australian BBSY plus an applicable margin of between~~ ~~2.00% and 3.75%~~ ~~per annum depending on the Foxtel Debt Group’s net leverage ratio. As of December 31, 2019, the Foxtel Debt Group was paying a margin of 3.00% on drawn amounts under these facilities.~~

~~(d)~~

~~During November 2019,~~

~~the Foxtel Debt Group entered into an A~~

~~$250 million~~

~~term loan facility maturing in~~ ~~November 2024~~ ~~(the “2019 Term Loan Facility”). Borrowings under the 2019 Term Loan Facility bear interest at a fixed rate of~~

~~6.25%~~

~~per annum.~~

~~(e)~~

During November 2019, the Foxtel Debt Group amended its 2017 Working Capital Facility which, among other things, extended the remaining term to three years, decreased the capacity under the facility from A

~~$100~~

~~million to~~

~~$40~~

~~million and increased the applicable margin.~~

~~(f)~~	~~As of December 31, 2019, the Foxtel Debt Group has undrawn commitments of $11 million under this facility for which it pays a commitment fee of 45% of the applicable margin.~~
~~(g)~~	~~During the first quarter of fiscal 2020, the Foxtel Debt Group repaid $~~ ~~150~~ ~~million aggregate principal amount of senior unsecured notes which matured in July 2019 and $~~ 75 ~~million aggregate principal amount of senior unsecured notes which matured in September 2019.~~

~~(h)~~	~~The carrying values of the borrowings include any fair value adjustments related to the Company’s fair value hedges. See Note 8 —Financial Instruments and Fair Value Measurements.~~
~~(i)~~	~~During December~~ ~~2019, REA Group repaid the final A$~~ ~~240~~ ~~million tranche of its A$~~ ~~480~~ ~~million revolving loan facility using a combination of cash on hand and new indebtedness.~~

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(j)~~

Borrowings under these facilities bear interest at a floating rate of the Australian BBSY plus a margin of between 0.85% and 1.40% depending on REA Group’s net leverage ratio. As of December 31, 2019, REA Group was paying a margin of 0.85% on drawn amounts under these facilities.

~~(k)~~

~~During December 2019, REA Group entered into an A$170 million unsecured syndicated revolving loan facility maturing in~~

~~December~~

~~(the “2019 REA Group~~

~~Credit~~

~~Facility”).~~

~~(l)~~

~~The Company classifies the current portion of long term debt as~~

~~non-current~~

~~liabilities on the Balance Sheets when it has the intent and ability to refinance the obligation on a long-term basis, in accordance with ASC~~

~~470-50~~

~~“Debt.”~~

~~Foxtel Group Borrowings~~

~~In November 2019, the Foxtel Debt Group completed a debt refinancing resulting in the repayment of A$1.1 billion of~~

~~debt~~

~~capacity~~

~~consisting of~~

~~its A$~~

~~200~~

~~million credit facility maturing in~~ ~~January 2020, its A$400 million credit facility maturing in~~ ~~July 2020, its A$400 million credit facility maturing in~~ ~~September 2021~~ and amounts outstanding under the 2017 Working Capital Facility. The repayments were funded with approximately A$1.1 billion of new facilities which included proceeds from the 2019 Credit Facility, the 2019 Term Loan Facility and an A$200 million shareholder loan

~~from~~

the Company. In addition, the Foxtel Debt Group amended its 2017 Working Capital Facility which, among other things, extended the remaining term to three years, decreased the capacity under the facility from A$100 million to A$40 million and increased the applicable margin.

~~Borrowings under the 2019 Credit Facility~~ bear interest at a floating rate of the Australian BBSY plus an applicable margin of between 2.00% and 3.75% per annum depending on the Foxtel Debt Group’s (defined below) net leverage ~~ratio and carry~~ratio.

(b)Borrowings under this facility bear interest at a fixed rate of 6.25% per annum.

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(c)As of September 30, 2020, the Foxtel Debt Group had undrawn commitments of A$95 million under these facilities for which it pays a commitment fee of 45% of the applicable ~~margin on any undrawn balance.~~ margin.

(d)Borrowings under ~~the 2019 Term Loan Facility~~this facility bear interest at a fixed rate of 6.25%. As of December 31, 2019, the Foxtel Debt Group had drawn down the full A$610 million available under the 2019 Credit Facility and A$250 million available under the 2019 Term Loan Facility.

The agreements governing the 2019 Credit Facility and 2019 Term Loan Facility contain customary affirmative and negative covenants and events of default, with customary exceptions, including covenants restricting or prohibiting members of the Foxtel Debt Group from, among other things, undertaking certain transactions, disposing of certain properties or assets, merging or consolidating with any other person, making financial accommodation available, giving guarantees, creating or permitting certain liens and undergoing fundamental business changes. In addition, the agreements

require the Foxtel Debt Group to maintain a ratio of net debt to Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”), as adjusted under the applicable agreements, of not more than 3.75 to 1.0 for fiscal 2020, not more than 3.50 to 1.0 for fiscal 2021 and not more than 3.25 to 1.0 for fiscal 2022 and thereafter. The 2019 Credit Facility and the 2019 Term Loan Facility require the Foxtel Debt Group to maintain a net interest coverage ratio of not less than 3.5 to

1.0. Borrowings under the 2019 Credit Facility and 2019 Term Loan Facility are only guaranteed by the members of the Foxtel Debt Group, and there are no assets pledged as collateral for any of the borrowings.

~~In February~~

2020, the Foxtel Debt Group entered into a subordinated shareholder loan facility agreement (the “Telstra Facility”) with Telstra, an Australian Securities Exchange (“ASX”)-listed telecommunications company which owns a 35% interest in Foxtel. The Telstra Facility provides Foxtel with up to A$170 million that can be used to finance cable transmission costs due to Telstra under a services arrangement between Foxtel and Telstra. The Telstra Facility bears interest at a variable rate of ~~the~~ Australian BBSY plus ~~an applicable~~a margin of 7.75% ~~and matures in December 2027.~~. The ~~terms~~Company excludes borrowings under this facility from the Statements of Cash Flows as they are non-cash.

(e)The carrying values of the ~~Telstra Facility allow for the capitalization of accrued interest~~borrowings include any fair value adjustments related to the ~~principal outstanding.~~

Company’s fair value hedges. See Note 7—Financial Instruments and Fair Value Measurements.

~~REA Group Facilities~~

~~In December 2019, REA Group completed a debt refinancing~~

~~in which it repaid~~

~~the final A$240 million tranche of its A$480~~

~~million revolving loan facility with the proceeds of the new 2019 REA Group Credit Facility and cash on hand.~~ (f)Borrowings under ~~the 2019 REA Group Credit Facility~~this facility bear interest at a floating rate of the Australian BBSY plus a margin of

between 0.85% and ~~1.30%~~2.75% depending on REA Group’s net leverage ~~ratio~~ratio.

(g)Borrowings under this facility bear interest at a floating rate of the Australian BBSY plus a margin of between 0.85% and ~~carry~~2.00% depending on REA Group’s net leverage ratio.

(h)Borrowings under this facility bear interest at a ~~commitment~~floating rate of the Australian BBSY plus a margin of 2.00% or 2.75% depending on REA Group’s net leverage ratio.

(i)The Company’s outstanding borrowings as of September 30, 2020 were incurred by certain subsidiaries of NXE Australia Pty Limited (“Foxtel” and together with such subsidiaries, the “Foxtel Debt Group”) and by REA Group and certain of its subsidiaries. Foxtel and REA Group are consolidated but non wholly-owned subsidiaries of News Corp. These borrowings are only guaranteed by Foxtel and REA Group and certain of their respective subsidiaries, as applicable, and are non-recourse to News Corp.

(j)The Company classifies the current portion of long term debt as non-current liabilities on the Balance Sheets when it has the intent and ability to refinance the obligation on a long-term basis, in accordance with ASC 470-50 “Debt.” $28 million relates to the current portion of finance lease liabilities.

REA Group has access to an A$20 million overdraft facility (the “2020 Overdraft Facility”). The 2020 Overdraft Facility is an uncommitted facility that will be reviewed annually by the lender and bears interest at a rate based on the lender’s benchmark borrowing rate less a discount of 4.22%. The 2020 Overdraft Facility carries an annual facility fee of ~~40%~~0.15% of the ~~applicable margin on any undrawn balance.~~A$20 million overdraft limit. As of ~~December 31, 2019,~~September 30, 2020, REA Group had ~~drawn down the full A$170 million available~~0t borrowed any funds under the ~~2019~~2020 Overdraft Facility. In October 2020, REA Group

~~Cred~~

~~Facility.~~

~~The 2019 REA Group~~

~~Cre~~

~~dit~~

~~Facility requires~~ amended certain terms of its credit facilities to, among other things, require REA Group to maintain a net leverage ratio of not more than

~~3.25~~

3.50 to 1.0 ~~and a net interest coverage ratio of not less than~~

~~3.0~~

subsequent to ~~1.0.~~

December 31, 2020.

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~News Corp Revolving Credit Facility~~

~~In December 2019, the~~The Company ~~terminated its existing unsecured $650 million revolving credit facility, and entered into a new credit agreement (the “2019 Credit Agreement”) which provides for~~has access to an unsecured $750 million revolving credit facility (the “2019 News Corp

~~Cred~~

Credit Facility”) under the Company’s 2019 Credit Agreement (the “2019 Credit Agreement”) that can be used for general corporate purposes. The 2019 News Corp

Credit

Facility has a sublimit of $100 million available for issuances of letters of credit. ~~Under the 2019 Credit Agreement, the~~The Company may request increases in the amount of the facility up to a maximum amount of $1 billion. The lenders’ commitments to make the 2019 News Corp

Credit

Facility available terminate on

December 12, 2024,

and

the Company may request that the commitments be extended under certain circumstances for up to ~~two~~2 additional one-year periods.

~~periods.~~

Interest on borrowings under the 2019 News Corp

Credit

Facility is based on either (a) a Eurodollar Rate formula or (b) the Base Rate formula, each as set forth in the 2019 Credit ~~agreement.~~Agreement. The applicable margin and the commitment fee are based on the pricing grid in the 2019 Credit Agreement, which varies based on the Company’s adjusted operating income

net

leverage ratio. As of ~~December 31, 2019,~~September 30, 2020, the Company was paying a commitment fee of 0.20% on any undrawn balance and an applicable margin of 0.375% for a Base Rate borrowing and 1.375% for a Eurodollar Rate borrowing. As of ~~December 31, 2019,~~September 30, 2020, the Company ~~has~~

thad 0t borrowed any funds under the 2019 News Corp Credit Facility.

The 2019 Credit Agreement contains certain customary affirmative and negative covenants and events of default with customary exceptions, including limitations on the ability of the Company and the Company’s subsidiaries to engage in transactions with affiliates, incur liens, merge into or consolidate with any other entity, incur subsidiary debt or dispose of all or substantially all of its assets or all or substantially all of the stock of all subsidiaries taken as a whole. In addition, the

2019 Credit Agreement requires the Company to maintain an adjusted operating income net leverage ratio of not more than 3.0 to 1.0, subject to certain adjustments following a material acquisition, and a net interest coverage ratio of not less than 3.0 to 1.0.

Covenants

The Company’s borrowings contain customary representations, covenants and events of

default, including those discussed ~~above.~~in the Company’s 2020 Form 10-K. If any of the events of default occur and are not cured within applicable grace periods or waived, any unpaid amounts under the Company’s debt agreements may be declared immediately due and payable. The Company was in compliance with all such covenants at ~~December 31, 2019.~~

~~NOTE 6. LEASES~~

~~On July 1, 2019, the Company adopted ASU~~

~~2016-02~~

~~on a modified retrospective basis and recognized a $9 million cumulative-effect adjustment to the opening balance of Accumulated deficit related to previous sale leaseback transactions. ASU~~

~~2016-02~~

~~requires lessees to recognize all operating leases on the balance sheet by recording a lease liability and a~~

~~right-of-use~~

asset. The lease liability represents the present value of the Company’s lease obligations over the lease term. The discount rate used was calculated using the Company’s incremental borrowing rate (“IBR”) which represents the interest rate at which the Company would be expected to borrow an amount equal to the lease payments on a secured basis over a similar term. To derive the IBR, the Company utilizes unsecured borrowing rates and adjusts those rates using the notching method to approximate a collateralized rate. Further adjustments are made to reflect the primary geographies in which the Company operates. The

~~right-of-use~~

~~asset represents the Company’s right to use, or control the use of, the underlying asset for the lease term at lease commencement. The Company recorded operating lease~~

~~right-of-use~~

assets, current operating lease liabilities and noncurrent operating lease liabilities for its operating leases of approximately $1.4 billion, $0.2 billion and $1.4 billion, respectively, on July 1, 2019.

The Company assesses whether an arrangement is a lease or contains a lease at inception. For arrangements considered leases or that contain a lease that is accounted for separately, the classification and initial measurement of the

~~right-of-use~~

asset and lease liability is determined at lease commencement, which is the date the underlying asset becomes available for use. The Company recognized the current and noncurrent portion of its lease liabilities within Other current liabilities and Operating lease liabilities, respectively, and its

~~right-of-use~~

~~assets within Operating lease~~

~~right-of-use~~

~~assets in its Balance Sheet.~~

Rent expense is recognized for operating leases on a straight-line basis over the lease term. Such amounts are presented within either Selling, general and administrative or Operating expenses in the Statement of Operations based on the nature of the lease. Variable lease payments are expensed in the period incurred. The Company’s variable lease payments consist of payments dependent on various external indicators, including common area maintenance, real estate taxes and utility charges.

September 30, 2020.

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~The Company applied the package of practical expedients permitted under ASU~~

~~2016-02~~

transition guidance. Accordingly, the Company did not reassess: (1) whether an expired or existing contract is a lease or contains an embedded lease; (2) lease classification of an expired or existing lease; (3) capitalization of initial direct costs for an expired or existing lease; (4) existing land easements for lease accounting treatment.

~~In addition, the Company elected~~

~~to apply~~

the short term lease exemption to not record leases on the Balance Sheet that have a term of 12 months or less and do not contain purchase options reasonably certain of being exercised. The Company recognizes rent expense related to these leases on a straight-line basis over the lease term.

~~In circumstances where the Company is the lessee, the Company elected to account for lease and~~

~~non-lease~~

~~components as a single lease component for all asset classes. Additionally, the Company has contracts that contain customer premise equipment (i.e.,~~

~~set-top~~

~~units) for which we apply the lessor lease and~~

~~non-lease~~

~~component practical expedient and account for lease components and~~

~~non-lease~~

~~components (e.g., service revenue) as a single performance obligation pursuant to ASU~~

~~2014-09.~~

The Company applies this practical expedient when the lease component would be classified as an operating lease, if accounted for separately, and the service revenue component is the predominant component in the arrangement.

~~Summary of leases~~

The Company primarily leases real estate, including office space, warehouse space and printing facilities. It also leases satellite transponders for purposes of providing its subscription video service to consumers. These leases were determined to be operating leases in accordance with ASU

~~2016-02.~~

The Company’s operating leases generally include options to extend the lease term or terminate the lease. Such options do not impact the Company’s lease term assessment until the Company is reasonably certain that the option will be exercised.

Certain of the Company’s leases include rent adjustments which may be indexed to various metrics, including the consumer price index or other inflationary indexes. As a general matter, the Company’s real estate lease arrangements typically require adjustments resulting from changes in real estate taxes and other costs to operate the leased asset.

~~Other required lease disclosures~~

~~The total lease cost for operating leases included in the Statement of Operations was as follows:~~

For the
three months ended
December 31,

For the
six months ended
December 31,

Income Statement Location

2019

2019

(in millions)

Operating lease costs

Selling, general and administrative
$
51
$
99

Operating lease costs

Operating expenses

3

6

Short term lease costs

Operating expenses

3

5

Variable lease costs

Selling, general and administrative

10

19

Total lease costs
$
67
$
129

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Additional information related to the Company’s operating leases under ASU~~

~~2016-02:~~

As of
December 31, 2019

Weighted-average remaining lease term

11.3 years

Weighted-average incremental borrowing rate

3.25
%

For the
six months ended
December 31,

2019

(in millions)

Cash paid

-

Operating lease liabilities
$
116

Operating lease
right-of-use
asset obtained in exchange for operating lease liabilities
$
225

~~Future minimum lease payments under~~

~~non-cancellable~~

~~leases as of December 31, 2019 are as follows:~~

As of
December 31, 2019

(in millions)

Fiscal 2020 (six months remaining)
$
119

Fiscal 2021

207

Fiscal 2022

206

Fiscal 2023

193

Fiscal 2024

177

Thereafter

968

Total future minimum lease payments

1,870

Less: interest

344

Present value of minimum payments
$
1,526

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

NOTE

6 . EQUITY

The following tables summarize changes in equity for the three ~~and six~~ months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~

2019:


	For the three months ended September 30, 2020
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total News Corp Equity		Non-controlling Interests		Total Equity
	Shares	Amount		Shares	Amount
	(in millions)
Balance, June 30, 2020	389	$	4	200	$	2	$	12,148	$	(3,241)	$	(1,331)	$	7,582	$	807	$	8,389

Net income	—	—		—	—		—		34		—		34		13		47
Other comprehensive income	—	—		—	—		—		—		96		96		17		113
Dividends	—	—		—	—		(59)		—		—		(59)		(20)		(79)
Other	2	—		—	—		(14)		—		—		(14)		(2)		(16)
Balance, September 30, 2020	391	$	4	200	$	2	$	12,075	$	(3,207)	$	(1,235)	$	7,639	$	815	$	8,454


	For the three months ended September 30, 2019
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total News Corp Equity		Non-controlling Interests		Total Equity
	Shares	Amount		Shares	Amount
	(in millions)
Balance, June 30, 2019	386	$	4	200	$	2	$	12,243	$	(1,979)	$	(1,126)	$	9,144	$	1,167	$	10,311
Cumulative impact from adoption of new standards	—	—		—	—		—		6		3		9		—		9
Net (loss) income	—	—		—	—		—		(227)		—		(227)		16		(211)
Other comprehensive loss	—	—		—	—		—		—		(143)		(143)		(45)		(188)
Dividends	—	—		—	—		(59)		—		—		(59)		(22)		(81)
Other	2	—		—	—		(10)		—		—		(10)		(1)		(11)
Balance, September 30, 2019	388	$	4	200	$	2	$	12,174	$	(2,200)	$	(1,266)	$	8,714	$	1,115	$	9,829

For the three months ended December 31, 2019

Accumulated

Class A

Class B

Additional

Other

Total

Common Stock

Common Stock

Paid-in

Accumulated

Comprehensive

News Corp

Non-controlling

Total

Shares

Amount

Shares

Amount

Capital

Deficit

Loss

Equity

Interests

Equity

(in millions)

Balance, September 30,
2019 388 $ 4 200 $ 2 $ 12,174 $ (2,200 ) $ (1,266 ) $ 8,714 $ 1,115 $ 9,829
Net income — — — — — 85 — 85 18 103
Other comprehensive
income
— — — — — — 150 150 36 186
Dividends — — — — — — — — — —
Other 1 — — — 9 1 (1 ) 9 — 9
Balance, December 31, 2019 389 $ 4 200 $ 2 $ 12,183 $ (2,114 ) $ (1,117 ) $ 8,958 $ 1,169 $ 10,127

For the three months ended December 31, 2018

Accumulated

Class A

Class B

Additional

Other

Total

Common Stock

Common Stock

Paid-in

Accumulated

Comprehensive

News Corp

Non-controlling

Total

Shares

Amount

Shares

Amount

Capital

Deficit

Loss

Equity

Interests

Equity

(in millions)

Balance, September 30, 2018 385 $ 4 200 $ 2 $ 12,257 $ (2,032 ) $ (970 ) $ 9,261 $ 1,169 $ 10,430
Net income — — — — —
95
— 95 24 119
Other comprehensive loss — — — — — —
(106
)
(106
)
(28
)
(134
)
Dividends — — — — — — — — — —
Other — — — — 14 — — 14 5 19
Balance, December 31, 2018 385 $ 4 200 $ 2 $ 12,271 $ (1,937 ) $ (1,076 ) $ 9,264 $ 1,170 $ 10,434

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

For the six months ended December 31, 2019

Accumulated

Class A

Class B

Additional

Other

Total

Common Stock

Common Stock

Paid-in

Accumulated

Comprehensive

News
Corp

Non
-
controlling

Total

Shares

Amount

Shares

Amount

Capital

Deficit

Loss

Equity

Interests

Equity

(in millions)

Balance, June 30, 2019

386
$
4

200
$
2
$
12,243
$
(1,979
) $
(1,126
) $
9,144
$
1,167
$
10,311

Cumulative impact from adoption of new standards

—

—

—

—

—

6

3

9

—

9

Net
(
loss
)

income

—

—

—

—

—

(142
)
—

(142
)
34

(108
)
Other comprehensive
income (
loss
)

—

—

—

—

—

—

7

7

(9
)
(2
)
Dividends

—

—

—

—

(59
)
—

—

(59
)
(22
)
(81
)
Other

3

—

—

—

(1
)
1

(1
)
(1
)
(1
)
(2
)

Balance, December 31, 2019

389
$
4

200
$
2
$
12,183
$
(2,114
) $
(1,117
) $
8,958
$
1,169
$
10,127

For the six months ended December 31, 2018

Accumulated

Class A

Class B

Additional

Other

Total

Common Stock

Common Stock

Paid-in

Accumulated

Comprehensive

News
Corp

Non
-
controlling

Total

Shares

Amount

Shares

Amount

Capital

Deficit

Loss

Equity

Interests

Equity

(in millions)

Balance, June 30, 2018

383
$
4

200
$
2
$
12,322
$
(2,163
) $
(874
) $
9,291
$
1,186
$
10,477

Cumulative impact from adoption of new standards

—

—

—

—

—

32

(22
)
10

10

20

Net income

—

—

—

—

—

196

—

196

51

247

Other comprehensive
loss

—

—

—

—

—

—

(181
)
(181
)
(56
)
(237
)
Dividends

—

—

—

—

(59
)
—

—

(59
)
(23
)
(82
)
Other

2

—

—

—

8

(2
)
1

7

2

9

Balance, December 31, 2018

385
$
4

200
$
2
$
12,271
$
(1,937
) $
(1,076
) $
9,264
$
1,170
$
10,434

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

Stock Repurchases

The Company did 0t purchase any of its Class A Common Stock or Class B Common Stock during the three months ended September 30, 2020 and 2019.

Dividends

In ~~May 2013,~~August 2020, the Company’s Board of Directors (the “Board of Directors”) authorized the Company to repurchase up to an aggregate of $500 million of its Class A Common Stock. NaN stock repurchases were made during the six months ended December 31, 2019 and 2018. Through January 31, 2020, the Company cumulatively repurchased approximately 5.2 million shares of Class A Common Stock for an aggregate cost of approximately $71 million. The remaining authorized amount under the stock repurchase program as of January 31, 2020 was approximately $429 million. All decisions regarding any future stock repurchases are at the sole discretion of a duly appointed committee of the Board of Directors and management. The committee’s decisions regarding future stock repurchases will be evaluated from time to time in light of many factors, including the Company’s financial condition, earnings, capital requirements and debt facility covenants, other contractual restrictions, as well as legal requirements, regulatory constraints, industry practice, market volatility and other factors that the committee may deem relevant. The stock repurchase authorization may be modified, extended, suspended or discontinued at any time by the Board of Directors and the Board of Directors cannot provide any assurances that any additional shares will be repurchased.

~~The Company did 0t purchase any of its Class B Common Stock during the six months ended December 31, 2019 and 2018.~~

~~Dividends~~

~~In August 2019, the Board of Directors~~ declared a semi-annual cash dividend of $0.10 per share for Class A Common Stock and Class B Common Stock. This dividend was paid on October ~~16, 2019~~14, 2020 to stockholders of record ~~at the close on business on~~as of September 11, 2019. In August 2018, the Board of Directors declared a semi-annual cash dividend of $0.10 per share for Class A Common Stock and Class B Common Stock. This dividend was paid on October 17, 2018 to stockholders of record at the close of business on September 12, 2018.16, 2020. The timing, declaration, amount and payment of future dividends to stockholders, if any, is within the discretion of the Board of Directors. The Board of Directors’ decisions regarding the payment of future dividends will depend on many factors, including the Company’s financial condition, earnings, capital requirements and debt facility covenants, other contractual restrictions, as well as legal requirements, regulatory constraints, industry practice, market volatility and other factors that the Board of Directors deems relevant.

NOTE

. 7. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

In accordance with ASC 820, “Fair Value Measurements” (“ASC 820”) fair value measurements are required to be disclosed using a three-tiered fair value hierarchy which distinguishes market participant assumptions into the following categories:

•Level 1 — Quoted prices in active markets for identical assets or liabilities.

•Level 2 — Observable inputs other than quoted prices included in Level 1. The Company could value assets and liabilities included in this level using dealer and broker quotations, certain pricing models, bid prices, quoted prices for

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data.

•Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. For the Company, this primarily includes the use of forecasted financial information and other valuation related assumptions such as discount rates and long term growth rates in the income approach as well as the market approach which utilizes certain market and transaction multiples.

Under ASC 820, certain assets and liabilities are required to be remeasured to fair value at the end of each reporting period.

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

The following table summarizes those assets and liabilities measured at fair value on a recurring basis:


	As of December 31, 2019								As of June 30, 2019									As of September 30, 2020								As of June 30, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)																	(in millions)
Assets:																	Assets:
Foreign currency derivatives - cash flow hedges	$	—	$	—	$	—	$	—	$	—	$	1	$	—	$	1
Cross currency interest rate derivatives - fair value hedges		—		21		—		21		—		29		—		29
Cross currency interest rate derivatives - economic hedges		—		—		—		—		—		12		—		12
Cross currency interest rate derivatives - cash flow hedges		—		82		—		82		—		116		—		116

Cross-currency interest rate derivatives - fair value hedges																	Cross-currency interest rate derivatives - fair value hedges	$	0	$	21	$	0	$	21	$	0	$	24	$	0	$	24

Cross-currency interest rate derivatives - cash flow hedges																	Cross-currency interest rate derivatives - cash flow hedges	0		87		0		87		0		98		0		98
Equity securities (a)		77		—		109		186		74		—		113		187	Equity securities(a)	68		0		129		197		54		0		123		177

Total assets	$	77	$	103	$	109	$	289	$	74	$	158	$	113	$	345	Total assets	$	68	$	108	$	129	$	305	$	54	$	122	$	123	$	299

Liabilities:																	Liabilities:
Foreign currency derivatives - cash flow hedges	$	—	$	2	$	—	$	2	$	—	$	—	$	—	$	—	Foreign currency derivatives - cash flow hedges	$	0	$	3	$	0	$	3	$	0	$	3	$	0	$	3
Interest rate derivatives - cash flow hedges		—		16		—		16		—		20		—		20	Interest rate derivatives - cash flow hedges	0		15		0		15		0		16		0		16
Mandatorily redeemable noncontrolling interests		—		—		—		—		—		—		11		11
Cross currency interest rate derivatives - cash flow hedges		—		17		—		17		—		18		—		18

Cross-currency interest rate derivatives - cash flow hedges																	Cross-currency interest rate derivatives - cash flow hedges	0		18		0		18		0		18		0		18
Total liabilities	$	—	$	35	$	—	$	35	$	—	$	38	$	11	$	49	Total liabilities	$	0	$	36	$	0	$	36	$	0	$	37	$	0	$	37

(a)See Note 4—Investments.

~~(a)~~

~~See Note~~

~~—Investments.~~

There have been no transfers between levels of the fair value hierarchy during the periods presented.

Equity securities

The fair values of equity securities with quoted prices in active markets are determined based on the closing price at the end of each reporting period. These securities are classified as Level 1 in the fair value hierarchy outlined above. The fair values of equity securities without readily determinable fair market values are determined based on cost, less any impairment, plus or minus changes in fair value resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. These securities are classified as Level 3 in the fair value hierarchy outlined above.

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

A rollforward of the Company’s equity securities classified as Level 3 is as follows:

For the six months ended December 31,

2019

2018

(in millions)

Balance - beginning of period
(a)
$
113

$

127

Purchases

1

6

Sales

—

(10
)
Measurement adjustments
(3 ) —
Foreign exchange and other

(2
)
(8
)
Balance - end of period
$
109
$
115

~~(a)~~

~~As a result of the adoption of ASU~~

~~2016-01~~

during the first quarter of fiscal 2019, the cumulative net unrealized gains (losses) for these investments contained within Accumulated other comprehensive loss were reclassified through Accumulated deficit as of July 1, 2018.


	For the three months ended September 30,
	2020		2019
	(in millions)
Balance - beginning of period	$	123	$	113
Additions	6		0


Foreign exchange and other	0		(1)
Balance - end of period	$	129	$	112

~~Mandatorily redeemable noncontrolling interests~~13

~~The Company has liabilities recorded in its Balance Sheets for its mandatorily redeemable noncontrolling interests. These liabilities represent management’s best estimate~~Table of the amounts expected to be paid in accordance with the contractual terms of the underlying acquisition agreements. The fair values of these liabilities are based on the contractual payout formulas included in the acquisition agreements taking into account the expected performance of the business. Any remeasurements or accretion related to the Company’s mandatorily redeemable noncontrolling interests are recorded through Interest expense, net in the Statements of Operations. As the fair value does not rely on observable market inputs, the Company classifies these liabilities as Level 3 in the fair value hierarchy.Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~A rollforward of the Company’s mandatorily redeemable noncontrolling interest liabilities classified as Level 3 is as follows:~~

For the six months ended December 31,

2019

2018

(in millions)

Balance - beginning of period
$
12
$
12

Payments
(a)

(11
)
—

Other

(1
)
—

Balance - end of period
$
—
$
12

~~(a)~~

~~In July 2019, REA Group acquired the remaining 19.7% interest in Smartline Home Loans Pty Limited for approximately $11 million, increasing REA Group’s ownership to 100%.~~

Derivative Instruments

The Company is directly and indirectly affected by risks associated with changes in certain market conditions. When deemed appropriate, the Company uses derivative instruments to mitigate the potential impact of these market risks. The primary market risks managed by the Company through the use of derivative instruments include:

•foreign currency exchange rate risk: arising primarily through Foxtel Debt Group borrowings denominated in United States (“U.S.”) dollars, ~~and~~ payments for customer premise ~~equipment;~~equipment, and certain programming rights; and

•interest rate risk: arising from fixed and floating rate Foxtel Debt Group borrowings.

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

The Company formally designates qualifying derivatives as hedge relationships (“hedges”) and applies hedge accounting when considered appropriate. For economic hedges where no hedge relationship has been designated, changes in fair value are included as a component of net income in each reporting period within Other, net in the Statements of Operations. The Company does not use derivative financial instruments for trading or speculative purposes.

Hedges are classified as current or

non-current

in the Balance Sheets based on their maturity dates. Refer to the table below for further details:


	Balance Sheet Location	As of September 30, 2020		As of June 30, 2020
		(in millions)




Cross-currency interest rate derivatives - fair value hedges	Other non-current assets	$	21	$	24
Cross-currency interest rate derivatives - cash flow hedges	Other non-current assets	87		98
Foreign currency derivatives - cash flow hedges	Other current liabilities	(3)		(3)

Interest rate derivatives - cash flow hedges	Other non-current liabilities	(15)		(16)
Cross-currency interest rate derivatives - cash flow hedges	Other non-current liabilities	(18)		(18)

Balance Sheet Location

As of
December 31,
2019

As of
June 30,
2019

(in millions)

Foreign currency derivatives - cash flow hedges

Other current assets
$
—
$
1

Cross currency interest rate derivatives - fair value hedges

Other current assets

—

8

Cross currency interest rate derivatives - economic hedges

Other current assets

—

12

Cross currency interest rate derivatives - cash flow hedges

Other current assets

—

33

Cross currency interest rate derivatives - fair value hedges

Other non-current assets

21

21

Cross currency interest rate derivatives - cash flow hedges

Other non-current assets

82

83

Foreign currency derivatives - cash flow hedges Other current liabilities
(2
) —
Interest rate derivatives - cash flow hedges

Other current liabilities

—

(2
)
Interest rate derivatives - cash flow hedges

Other non-current liabilities

(16
)
(18
)
Cross currency interest rate derivatives - cash flow hedges

Other non-current liabilities

(17
)
(18
)

Cash flow hedges

The Company utilizes a combination of foreign currency derivatives, interest rate derivatives and ~~cross currency~~cross-currency interest rate derivatives to mitigate currency exchange and interest rate risk in relation to future interest

and principal payments

and payments for customer premise equipment.

The total notional value of foreign currency contract derivatives designated for hedging was ~~$58~~$29 million as of ~~December 31, 2019.~~September 30, 2020. The maximum hedged term over which the Company is hedging exposure to foreign currency fluctuations is to ~~September 2020.~~February 2021. As of

~~Dec~~

~~ember 3~~

~~, 2019,~~ September 30, 2020, the Company estimates that

approximately

$2 million of

net derivative

losses

related to its foreign currency contract derivative cash flow hedges included in Accumulated other comprehensive loss will be reclassified into the ~~Statement~~Statements of Operations within the next 12 months.

The total notional value of interest rate swap derivatives designated as cash flow hedges was approximately A$300 million as of ~~December 31, 2019.~~September 30, 2020. The maximum hedged term over which the Company is hedging exposure to variability in interest payments is to September 2022. As of ~~December 31, 2019,~~September 30, 2020, the Company estimates that approximately

~~lion~~ $3 million of

net derivative gains related to its interest rate swap derivative cash flow hedges included in Accumulated other comprehensive loss will be reclassified into the ~~Statement~~Statements of Operations within the next 12 months.

The total notional value of ~~cross currency~~cross-currency interest rate swaps that were designated as cash flow hedges was approximately $280 million as of ~~December 31, 2019.~~September 30, 2020. The maximum hedged term over which the Company is hedging exposure to variability in interest payments is to July 2024. As of ~~December 31, 2019,~~September 30, 2020, the Company estimates that

approximately

$2 million of

net derivative gains related to its ~~cross currency~~cross-currency interest rate swap derivative cash flow hedges included in Accumulated other comprehensive loss will be reclassified into the ~~Statement~~Statements of Operations within the next 12 months.

314

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NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the impact that changes in the fair values of derivatives designated as cash flow hedges had on Accumulated other comprehensive loss and the ~~Statement~~Statements of Operations during the three ~~and six~~ months ended ~~December 31, 2019~~September 30, 2020 and ~~2018.~~

Gain (loss) recognized in
Accumulated

(Gain) loss reclassified from
Accumulated

other comprehensive loss
for the three months ended

other comprehensive loss
for the three months ended

Income statement

December 31,

December 31,

location

2019

2018

2019

2018

(in millions)

Derivative instruments designated as cash flow hedges:

Foreign currency derivatives - cash flow hedges
$
(1
) $
2
$
—
$
(1
)
Operating expenses
Cross currency interest rate derivatives - cash flow hedges

(13
)
30

12

(26
)
Interest expense, net
Interest rate derivatives - cash flow hedges

1

(1
)
1

2

Interest expense, net

Total
$
(13
) $
31
$
13
$
(25
)

Gain (loss) recognized in
Accumulated

(Gain) loss reclassified from
Accumulated

o
ther
c
omprehensive
l
oss
for the six months ended

o
ther
c
omprehensive
l
oss
for the six months ended

Income statement

December 31,

December 31,

location

2019

2018

2019

2018

(in millions)

Derivative instruments designated as cash flow hedges:

Foreign currency derivatives - cash flow hedges
$
(2
) $
4
$
(2
) $
(2
)
Operating expenses
Cross currency interest rate derivatives - cash flow hedges

(8
)
16

3

(12
)
Interest expense, net
Interest rate derivatives - cash flow hedges

(3
)

(2
)
(5
)
4

Interest expense, net

Total
$
(13
) $
18
$
(4
) $
(10
)

2019:


	Gain (loss) recognized in Accumulated Other Comprehensive Loss for the three months ended September 30,				(Gain) loss reclassified from Accumulated Other Comprehensive Loss for the three months ended September 30,				Income statement location
	2020		2019		2020		2019
	(in millions)
Derivative instruments designated as cash flow hedges:
Foreign currency derivatives - cash flow hedges	$	0	$	(1)	$	0	$	(2)	Operating expenses
Cross-currency interest rate derivatives - cash flow hedges	(15)		5		13		(9)		Interest (expense) income, net
Interest rate derivatives - cash flow hedges	0		(4)		1		(6)		Interest (expense) income, net
Total	$	(15)	$	0	$	14	$	(17)

Upon adoption of ASU

2017-12

as of July 1, 2019, the Company reclassified $5 million in gains from Accumulated deficit to Accumulated other comprehensive loss related to amounts previously recorded for the ineffective portion of outstanding derivative instruments designated as cash flow hedges. During the three months ended ~~December 31, 2018,~~September 30, 2020 and 2019, the Company excluded the currency basis from the changes in fair value of the derivative instruments from the assessment of hedge effectiveness.

Fair value hedges

Borrowings issued at fixed rates and in U.S. dollars expose the Company to fair value interest rate risk and currency exchange rate risk. The Company manages fair value interest rate risk and currency exchange rate risk through the use of ~~cross currency~~cross-currency interest rate swaps under which the Company exchanges fixed interest payments equivalent to the interest payments on the U.S. dollar denominated debt for floating rate Australian dollar denominated interest payments. The changes in fair value of derivatives designated as fair value hedges and the offsetting changes in fair value of the

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

hedged items are recognized in Other, net. For the ~~six~~three months ended ~~December 31, 2019,~~September 30, 2020, such adjustments increased the carrying value of borrowings by NaN.

The total notional value of the fair value hedges was approximately $70 million as of ~~December 31, 2019.~~September 30, 2020. The maximum hedged term over which the Company is hedging exposure to variability in interest payments is to July 2024.

During the three ~~and six~~ months ended ~~December 31,~~September 30, 2020 and 2019, ~~and 2018,~~ the amount recognized in the ~~Statement~~Statements of Operations on derivative instruments designated as fair value hedges related to the ineffective portion was NaN and the Company excluded the currency basis from the changes in fair value of the derivative instruments from the assessment of hedge effectiveness.

The following sets forth the effect of fair value hedging relationships on hedged items in the Balance Sheets as of ~~December 31, 2019:~~

As of

December 31, 2019

(in millions)

Borrowings:

Carrying amount of hedged item
$
68

Cumulative hedging adjustments included in the carrying amount

$
(3
)

September 30, 2020 and June 30, 2020:


	As of September 30, 2020		As of June 30, 2020
	(in millions)
Borrowings:
Carrying amount of hedged item	$	70	$	71
Cumulative hedging adjustments included in the carrying amount	5		6

~~Nonrecurring Fair Value Measurements~~

In addition to assets and liabilities that are remeasured at fair value on a recurring basis, the Company has certain assets, primarily goodwill, intangible assets, equity method investments and property, plant and equipment, that are not required to be remeasured to fair value at the end of each reporting period. On an ongoing basis, the Company monitors whether events occur or circumstances change that would more likely than not reduce the fair values of these assets below their carrying amounts. If the Company determines that these assets are impaired, the Company would write down these assets to fair value. These nonrecurring fair value measurements are considered to be Level 3 in the fair value hierarchy.

~~During the first quarter of fiscal 2020, the Company recognized~~

~~non-cash~~

impairment charges of $122 million and $113 million related to goodwill and indefinite-lived intangible assets, respectively, at the News America Marketing reporting unit. The carrying value of goodwill at News America Marketing decreased from $122 million to NaN and the value of indefinite-lived intangible assets decreased from $308 million to $195 million. See Note 3 – Impairment and Restructuring Charges.

~~The Company did not recognize any write-downs on the carrying value of its assets during the three~~

~~and six~~

~~months ended December 31, 201~~

Other Fair Value Measurements

As of ~~December 31, 2019,~~September 30, 2020, the carrying value of the Company’s outstanding borrowings approximates the fair value. The U.S. private placement borrowings are classified as

~~evel~~ Level 2 and the remaining borrowings are classified as

~~evel~~ Level 3 in the fair value hierarchy.

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9.8 . EARNINGS (LOSS) PER SHARE

The following tables set forth the computation of basic and diluted earnings

(loss)

per share under ASC 260, “Earnings per Share”:


	For the three months ended September 30,
		2020		2019
		(in millions, except per share amounts)
Net income (loss)		$	47	$	(211)
Less: Net income attributable to noncontrolling interests		(13)		(16)
Net income (loss) attributable to News Corporation stockholders		$	34	$	(227)
Weighted-average number of shares of common stock outstanding - basic		589.5		586.7
Dilutive effect of equity awards(a)		1.3		0
Weighted-average number of shares of common stock outstanding - diluted		590.8		586.7
Net income (loss) attributable to News Corporation stockholders per share - basic and diluted		$	0.06	$	(0.39)

For the three months
ended December 31,

For the six months

ended
December 31,

2019

2018

2019

2018

(in millions, except per share amounts)

Net income (loss)
$
103
$
119
$
(108
) $
247

Less: Net income attributable to noncontrolling interests

(18
)
(24
)
(34
)
(51
)
Net income (loss) attributable to News Corporation stockholders
$
85
$
95
$
(142
) $
196

Weighted-average number of shares of common stock outstanding - basic

588.2

584.9

587.4

584.4

Dilutive effect of equity awards
(a)

2.1

2.2

—

1.9

Weighted-average number of shares of common stock outstanding - diluted

590.3

587.1

587.4

586.3

Net income (loss) attributable to News Corporation stockholders per share - basic
$
0.15
$
0.16
$
(0.24
) $
0.34

Net income (loss) attributable to News Corporation stockholders per share - diluted
$
0.14
$
0.16
$
(0.24
) $
0.33

(a)The dilutive impact of the Company’s performance stock units, restricted stock units and stock options has been excluded from the calculation of diluted loss per share for the three months ended September 30, 2019 because their inclusion would have an antidilutive effect on the net loss per share.

~~(a)~~

The dilutive impact of the Company’s performance stock units, restricted stock units and stock options has been excluded from the calculation of diluted loss per share for the six months ended December 31, 2019 because their inclusion would have an antidilutive effect on the net loss per share.

~~Note 10. Commitments and~~NOTE 9. COMMITMENTS AND CONTINGENCIES

Commitments

The Company has commitments under certain firm contractual arrangements (“firm commitments”) to make future payments. These firm commitments secure the future rights to various assets and services to be used in the normal course of operations. As a result of the refinancing transactions that occurred during the three months ended December 31, 2019, the Company has presented its commitments associated with its borrowings and the related interest payments in the table below. See Note 5 —Borrowings. The Company’s ~~remaining~~ commitments as of ~~December 31, 2019~~September 30, 2020 have not changed significantly from the disclosures included in the ~~2019 Form~~

2020 Form��10-K.

As of December 31, 2019

Payments Due by Period

Total

Less than 1
year

1-3
years

3-5
years

More than
5
years

(in millions)

Borrowings
$
1,199
$
—
$
875
$
324
$
—

Interest payments on borrowings
(a)

$
170

$

50

$

89

$

31

$

—

~~(a)~~

Reflects the Company’s expected future interest payments based on borrowings outstanding and interest rates applicable at December 31, 2019. Such outstanding amounts and rates are subject to change in future periods. See Note 5 —Borrowings.

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

Contingencies

The Company routinely is involved in various legal proceedings, claims and governmental inspections or investigations, including those discussed below. The outcome of these matters and claims is subject to significant uncertainty, and the Company often cannot predict what the eventual outcome of pending matters will be or the timing of the ultimate resolution of these matters. Fees, expenses, fines, penalties, judgments or settlement costs which might be incurred by the Company in connection with the various proceedings could adversely affect its results of operations and financial condition.

The Company establishes an accrued liability for legal claims when it determines that a loss is both probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters. Legal fees associated with litigation and similar proceedings are expensed as incurred. Except as otherwise provided below, for the contingencies disclosed for which there is at least a reasonable possibility that a loss may be incurred, the Company was unable to estimate the amount of loss or range of loss. The Company recognizes gain contingencies when the gain becomes realized or realizable.

News America Marketing

In May 2020, the Company sold its News America Marketing business. In the transaction, the Company retained certain liabilities, including those arising from the legal proceedings with Insignia Systems, Inc. (“Insignia”) and Valassis Communications, Inc. (“Valassis”) described below.

Insignia Systems, Inc.

On July 11, 2019, Insignia ~~Systems, Inc. (“Insignia”)~~ filed a complaint in the U.S. District Court for the District of Minnesota against News America Marketing FSI L.L.C. (“NAM FSI”), News America Marketing

In-Store

Services L.L.C. (“NAM

In-Store”)

and News

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Corporation (together, the “NAM Parties”) alleging violations of federal and state antitrust laws and common law business torts. The complaint seeks treble damages, injunctive relief and attorneys’ fees and costs. On August 14, 2019, the NAM Parties answered the complaint and asserted a counterclaim against Insignia for breach of contract, alleging that Insignia violated a prior settlement agreement between NAM

In-Store

and Insignia. ~~The~~On July 10, 2020, each of the NAM Parties ~~subsequently~~and Insignia filed a motion seeking dismissal of the complaint on October 21, 2019. On November 11, 2019, Insignia filed an opposition to the NAM Parties’ motion and a cross-motion seeking dismissal of the counterclaim, which the NAM Parties opposed. The court held a hearingfor summary judgment on the ~~motion and cross-motion on January 14, 2020.~~counterclaim. While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this action, the NAM Parties believe they have been compliant with applicable laws and intend to defend themselves vigorously.

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

Valassis Communications, Inc.

On November 8, 2013, Valassis ~~Communications, Inc. (“Valassis”)~~ filed a complaint in the U.S. District Court for the Eastern District of Michigan (the “District Court”) against the NAM Parties and News America Incorporated (together, the “NAM Group”) alleging violations of federal and state antitrust laws and common law business torts, including unfair competition. The complaint seeks treble damages, injunctive relief and attorneys’ fees and costs. NAM

In-Store

and NAM FSI asserted a counterclaim against Valassis for unfair competition, alleging that Valassis has engaged in the same practices that it alleges to be

unfair. In November 2019, the parties agreed to discontinue the unfair competition claim and counterclaim.

On December 19, 2013, the NAM Group filed a motion to dismiss the complaint and on March 30, 2016, the District Court dismissed Valassis’s bundling and tying claims. On September 25, 2017, the District Court granted Valassis’s motion to transfer the case to the U.S. District Court for the Southern District of New York (the “N.Y. District Court”). On April 13, 2018, the NAM Group filed a motion for summary judgment dismissing the case which was granted in part and denied in part by the N.Y. District Court on February 21, 2019. The N.Y. District Court found that the NAM Group’s bidding practices were lawful but denied its motion with respect to claims arising out of certain other alleged contracting practices. In addition, the N.Y. District Court also dismissed Valassis’s claims relating to free-standing insert products. On December 20, 2019, ~~at a final~~

~~pre-trial~~

~~conference,~~ the N.Y. District Court granted the NAM Group’s motion to exclude the testimony of Valassis’s sole damages ~~expert. Valassis filed a motion for clarification or~~

~~, in the alternative,~~

~~reconsideration of the N.Y. District Court’s ruling.~~

~~On February 6, 2020, the N.Y. District Court denied the motion for reconsideration~~expert, but subsequently clarified that Valassis could seek the court’s permission to prove damages through ~~evidence~~ other ~~than~~evidence. Valassis filed a motion to supplement and amend its ~~expert’s excluded testimony. The~~expert and pre-trial damages disclosures, which the N.Y. District Court ~~has set~~granted on April 24, 2020. On May 8, 2020, the NAM Group filed a motion to reconsider the N.Y. District Court’s April 24, 2020 decision, which the court denied on October 23, 2020. A trial date of

~~June 1, 2020.~~

has not been set by the court. While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this action, the NAM Group believes it has been compliant with applicable laws and intends to defend itself vigorously.

U.K. Newspaper Matters

Civil claims have been brought against the Company with respect to, among other things, voicemail interception and inappropriate payments to public officials at the Company’s former publication,

The News of the World

, and at

The Sun

, and related matters (the “U.K. Newspaper Matters”). The Company has admitted liability in many civil cases and has settled a number of cases. The Company also settled a number of claims through a private compensation scheme which was closed to new claims after April 8, 2013.

In connection with the separation of the Company from Twenty-First Century Fox, Inc. (“21st Century Fox”) on June 28, 2013, the Company and 21st Century Fox agreed in the Separation and Distribution Agreement that 21st Century Fox would indemnify the Company for payments made after such date arising out of civil claims and investigations relating to the U.K. Newspaper Matters as well as legal and professional fees and expenses paid in connection with the previously concluded criminal matters, other than fees, expenses and costs relating to employees (i) who are not directors, officers or certain designated employees or (ii) with respect to civil matters, who are not

co-defendants

with the Company or 21st Century Fox. 21st Century Fox’s indemnification obligations with respect to these matters are settled on an

after-tax

basis. In March 2019, as part of the separation of Fox Corporation (“FOX”) from 21st Century Fox, the Company, News Corp Holdings UK & Ireland, 21st Century Fox and FOX entered into a Partial Assignment and Assumption Agreement, pursuant to which, among other things, 21st Century Fox assigned, conveyed and transferred to FOX all of its indemnification obligations with respect to the U.K. Newspaper Matters.

The net

~~(benefit~~

)

expense related to the U.K. Newspaper Matters in Selling, general and administrative was

(

)

$2 million ~~and $~~

~~million~~ for both the three months ended ~~December~~

~~2019~~

~~and~~

~~2018~~

~~, respectively, and~~

~~million~~

September 30, 2020 and $

~~million for the six months ended December~~

~~2019~~

~~and~~

~~2018~~

~~, respectively.~~2019. As of ~~December~~

~~2019~~

,September 30, 2020, the Company has provided for its best ~~estima~~

estimate of the liability for the claims that have been filed and costs incurred, including liabilities associated with employment taxes, and has accrued approximately ~~$58~~$54 million. The amount to be indemnified by FOX of approximately ~~$60~~$61 million was recorded as a

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

receivable in Other current assets on the Balance Sheet as of ~~December 31, 2019.~~

The net (benefit) expense for the three and six months ended December 31, 2019 reflects a $5 million impact from the reversal of a portion of the Company’s previously accrued liability and the corresponding receivable from FOX as the result of an agreement reached with the relevant tax authority with respect to certain employment taxes.September 30, 2020. It is not possible to estimate the liability or corresponding receivable for any additional claims that may be filed given the information that is currently available to the Company. If more claims are filed and additional information becomes available, the Company will update the liability provision and corresponding receivable for such matters.

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

The Company is not able to predict the ultimate outcome or cost of the civil claims. It is possible that these proceedings and any adverse resolution thereof could damage its reputation, impair its ability to conduct its business and adversely affect its results of operations and financial condition.

Other

The Company’s tax returns are subject to

on-going

The Company believes it has appropriately accrued for the expected outcome of uncertain tax matters and believes such liabilities represent a reasonable provision for taxes ultimately expected to be paid; however, these liabilities may need to be adjusted as new information becomes known and as tax examinations continue to progress, or as settlements or litigations occur.

NOTE ~~11.~~10. INCOME TAXES

At the end of each interim period, the Company estimates the annual effective tax rate and applies that rate to its ordinary quarterly earnings. The tax expense or benefit related to significant, unusual or extraordinary items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur. In addition, the effects of changes in enacted tax laws or rates or tax status are recognized in the interim period in which the change occurs. The changing and volatile macro-economic conditions connected with COVID-19 may cause fluctuations in forecasted earnings before income taxes. As such, the Company’s effective tax rate could be subject to volatility as forecasted earnings before income taxes are impacted by events which are highly uncertain and cannot be predicted.

For the three months ended ~~December 31, 2019,~~September 30, 2020, the Company recorded income tax expense of ~~$52~~$25 million on

pre-tax

income of ~~$155~~$72 million, resulting in an effective tax rate that was higher than the U.S. statutory tax rate. The higher tax rate was primarily ~~due to valuation allowances being recorded against tax benefits in certain foreign jurisdictions with operating losses and~~driven by the Company’s jurisdictional income (loss) mix which includes the impact of foreign operations which are subject to higher ~~tax rates.~~taxes.

For the ~~six~~three months ended ~~December 31,~~September 30, 2019, the Company recorded an income tax ~~expense~~benefit of ~~$31~~$21 million on a

pre-tax

loss of ~~$77~~$232 million, resulting in an effective tax rate that was lower than the U.S. statutory tax rate. The lower tax rate was ~~impacted by~~primarily due to the lower tax benefit recorded on the impairment of News America Marketing’s goodwill and indefinite-lived intangible assets and by valuation allowances being recorded against tax benefits in certain foreign jurisdictions with operating ~~losses and by the impact of foreign operations which are subject to higher tax rates.~~losses.

~~For the three months ended December 31, 2018, the Company recorded income tax expense of $55 million on~~

~~pre-tax~~

income of $174 million resulting in an effective tax rate that was higher than the U.S. statutory tax rate. The higher tax rate was primarily due to valuation allowances being recorded against tax benefits in certain foreign jurisdictions with operating losses and the impact from foreign operations which are subject to higher tax rates.

~~For the six months ended December 31, 2018, the Company recorded income tax expense of $105 million on~~

~~pre-tax~~

income of $352 million resulting in an effective tax rate that was higher than the U.S. statutory tax rate. The higher tax rate was primarily due to valuation allowances being recorded against tax benefits in certain foreign jurisdictions with operating losses and the impact from foreign operations which are subject to higher tax rates.

that

~~certain~~ deferred tax assets in ~~U.S~~

~~Federal, State~~U.S. federal, state and foreign jurisdictions may not be realized and therefore, a valuation allowance has been established against those tax assets.

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

The Company’s tax returns are subject to

on-going

review and examination by various tax authorities. Tax authorities may not agree with the treatment of items reported in ~~our~~the Company’s tax returns, and therefore the outcome of tax reviews and examinations can be unpredictable. The Company is currently undergoing tax examinations ~~by the Internal Revenue Service (the “IRS”) and~~in various U.S. state and foreign jurisdictions. During the three months ended September 30, 2020, the Company reached a final settlement with the Internal Revenue Service for the fiscal year ended June 30, ~~2018,~~2014 as the ~~IRS commenced an audit~~statute of limitations expired for that year. There was no change from the results that the Company ~~for the~~

~~fiscal~~

~~year ended~~recorded as of June 30, ~~2014.~~2020 for this expiration of statute. The Company believes it has appropriately accrued for the expected outcome of uncertain tax matters and believes such liabilities represent a reasonable provision for taxes ultimately expected to be paid. However, the Company may need to accrue additional income tax expense and ~~our~~its liability may need to be adjusted as new information becomes known and as these tax examinations continue to progress, or as settlements or litigations occur.

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Company paid gross income taxes of ~~$69~~$23 million and ~~$75~~$27 million during the ~~six~~three months ended ~~December 31,~~September 30, 2020 and 2019, ~~and 2018,~~ respectively, and received tax refunds of $8 million and $3 million, ~~and $10 million,~~ respectively.

NOTE ~~12.~~11. SEGMENT INFORMATION

The Company manages and reports its businesses in the following 56 segments:

~~News and Information~~•Digital Real Estate Services

—The ~~News and Information~~Digital Real Estate Services segment ~~includes~~consists of the Company’s ~~global print,~~61.6% interest in REA Group and 80% interest in Move. The remaining 20% interest in Move is held by REA Group. REA Group is a market-leading digital media business specializing in property and ~~broadcast radio media platforms. These product offerings include~~is listed on the ~~global print~~Australian Securities Exchange (“ASX”) (ASX: REA). REA Group advertises property and property-related services on its websites and mobile apps across Australia and Asia, including Australia’s leading residential, commercial and share property websites, realestate.com.au, realcommercial.com.au and Flatmates.com.au, and property portals in Asia. In addition, REA Group provides property-related data to the financial sector and financial services through an end-to-end digital ~~versions of~~

~~The Wall Street Journal~~

property search and ~~Barron’s Group, which includes~~

~~Barron’s~~

financing experience and MarketWatch, the Company’s suite of professional information products, including Factiva, Dow Jones Risk & Compliance and Dow Jones Newswires, and its live journalism events. The Company also owns, among other publications,a mortgage broking offering.

~~The Australian~~

~~The Daily Telegraph, Herald Sun, The Courier Mail~~

~~and~~

~~The Advertiser~~

~~in Australia,~~

~~The Times, The Sunday Times, The Sun~~

~~and~~

~~The Sun on Sunday~~

~~in the U.K. and the~~

~~New York Post~~

~~in the U.S. This segment also includes News America Marketing,~~Move is a leading provider of ~~in-store marketing products~~digital real estate services in the U.S. and primarily operates realtor.com®, a premier real estate information and services ~~home-delivered shopper media~~marketplace. Move offers real estate advertising solutions to agents and ~~digital marketing solutions,~~brokers, including ~~Checkout 51’s mobile app,~~its ConnectionsSM Plus and AdvantageSM Pro products as well as ~~Wireless Group, operator~~its referral-based services. Move also offers a number of ~~talkSPORT, the leading sports radio network in the U.K.,~~professional software and ~~Storyful, a social media content agency.~~

services products, including Top Producer® and ListHub™.

•Subscription Video Services

—The Company’s Subscription

Video Services segment provides video sports, entertainment and news services to

pay-TV

~~listed~~ASX-listed telecommunications company) and (ii) Australian News Channel (“ANC”). Foxtel is the largest

pay-TV

provider in Australia, with nearly 200 channels covering sports, general entertainment, movies, documentaries, music, children’s programming and news. Foxtel offers the leading sports programming content in Australia, with broadcast rights to live sporting events including: National Rugby League, Australian Football League, Cricket Australia, the domestic football league, the Australian Rugby Union and various motorsports programming. Foxtel also operates Foxtel Now, an

over-the-top,

or OTT, service that provides access across Foxtel’s live and on-demand content, Kayo, ~~a sports-only~~its sports OTT service, and Binge, its recently launched on-demand entertainment OTT service.

ANC operates the SKY NEWS network, Australia’s

24-hour

multi-channel, multi-platform news service. ANC channels are distributed throughout Australia and New Zealand and available on Foxtel and Sky Network Television NZ. ANC also owns and operates the international Australia Channel IPTV service and offers content across a variety of digital media platforms, including web, mobile ~~podcasts~~ and ~~social~~third party providers.

•Dow Jones—The Dow Jones segment consists of Dow Jones, a global provider of news and business information, which distributes its content and data through a variety of media ~~websites.~~


	•	~~Book Publishing~~ —The Book Publishing segment consists of HarperCollins, the second largest consumer book publisher in the world, with operations in 17 countries and particular strengths in general fiction, nonfiction, children’s and religious publishing. HarperCollins owns more than 120 branded publishing imprints, including Harper, William Morrow, HarperCollins Children’s Books, Avon, Harlequin and Christian publishers Zondervan and Thomas Nelson, and publishes works by well-known authors such as Harper Lee, Chip and Joanna Gaines, Rick Warren, Sarah Young and Agatha Christie and popular titles such as ~~The Hobbit, Goodnight Moon, To Kill a Mockingbird, Jesus Calling~~ ~~and~~ ~~Hillbilly Elegy~~ .

channels including newspapers, newswires, websites, applications, or apps, for mobile devices, tablets and e-book readers, newsletters, magazines, proprietary databases, live journalism, video and podcasts. Dow Jones’s products, which target individual consumer and enterprise customers, include The Wall Street Journal, Factiva, Dow Jones Risk & Compliance, Dow Jones Newswires, Barron’s and MarketWatch.

•Book Publishing—The Book Publishing segment consists of HarperCollins, the second largest consumer book publisher in the world, with operations in 17 countries and particular strengths in general fiction, nonfiction, children’s and religious publishing. HarperCollins owns more than 120 branded publishing imprints, including Harper, William Morrow, HarperCollins Children’s Books, Avon, Harlequin and Christian publishers Zondervan and Thomas Nelson, and publishes works by well-known authors such as Harper Lee, Chip and Joanna Gaines, David Walliams, Angie Thomas, Sarah Young and Agatha Christie and popular titles such as The Hobbit, Goodnight Moon, To Kill a Mockingbird, Jesus Calling and The Hate U Give.

•News Media—The News Media segment consists primarily of News Corp Australia, News UK and the New York Post and includes, among other publications, The Australian, The Daily Telegraph, Herald Sun, The Courier Mail and The Advertiser in Australia and The Times, The Sunday Times, The Sun and The Sun on Sunday in the U.K. This segment also includes Wireless Group, operator of talkSPORT, the leading sports radio network in the U.K.,

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~Digital Real Estate Services~~

—and Storyful, a social media content agency. The ~~Digital Real Estate Services~~ segment ~~consists~~included News America Marketing until the completion of the ~~Company’s 61.6% interest in REA Group and 80% interest in Move. The remaining 20% interest in Move is held by REA Group. REA Group is a market-leading digital media~~sale of the business ~~specializing in property and is listed~~ on the ASX (ASX: REA). REA Group advertises property and property-related services on its websites and mobile apps across Australia and Asia, including Australia’s leading residential, commercial and share property websites, realestate.com.au, realcommercial.com.au, Flatmates.com.au and spacely.com.au, and property portals in Asia. In addition, REA Group provides property-related data to the financial sector and financial services through an end-to-end digital property search and financing experience and a mortgage broking offering.May 5, 2020.

~~Move is a leading provider of online real estate services in the U.S. and primarily operates realtor.com~~

~~, a premier real estate information and services marketplace. Move offers real estate advertising solutions to agents and brokers, including its Connections~~

~~Plus and Advantage~~

~~Pro products as well as its Opcity performance and subscription-based services. Move also offers a number of professional software and services products, including Top Producer~~

~~and ListHub~~

•Other

—The Other segment consists primarily of general corporate overhead expenses, the corporate Strategy Group, ~~and~~ costs related to the U.K. Newspaper ~~Matters. The~~Matters and transformation costs associated with the Company’s ~~Strategy Group identifies new products and~~global shared services ~~across its businesses to increase revenues and profitability and targets and assesses potential acquisitions, investments and dispositions.~~program.

Segment EBITDA is defined as revenues less operating expenses and selling, general and administrative expenses. Segment EBITDA does not include: depreciation and amortization, impairment and restructuring charges, equity losses of affiliates, interest (expense) income, net, other, net and income tax (expense) benefit. Segment EBITDA may not be comparable to similarly titled measures reported by other companies, since companies and investors may differ as to what items should be included in the calculation of Segment EBITDA.

Segment EBITDA is the primary measure used by the Company’s chief operating decision maker to evaluate the performance of and allocate resources within the Company’s businesses. Segment EBITDA provides management, investors and equity analysts with a measure to analyze the operating performance of each of the Company’s business segments and its enterprise value against historical data and competitors’ data, although historical results may not be indicative of future results (as operating performance is highly contingent on many factors, including customer tastes and preferences).

Segment information is summarized as follows:


	For the three months ended September 30,
		2020		2019
		(in millions)
Revenues:
Digital Real Estate Services		$	290	$	272
Subscription Video Services		496		514
Dow Jones		386		382
Book Publishing		458		405
News Media		487		767

Total revenues		$	2,117	$	2,340
Segment EBITDA:
Digital Real Estate Services		$	119	$	82
Subscription Video Services		78		81
Dow Jones		72		49
Book Publishing		71		49
News Media		(22)		7
Other		(50)		(47)
Depreciation and amortization		(164)		(162)
Impairment and restructuring charges		(40)		(297)
Equity losses of affiliates		(1)		(2)
Interest (expense) income, net		(8)		4
Other, net		17		4
Income (loss) before income tax (expense) benefit		72		(232)
Income tax (expense) benefit		(25)		21
Net income (loss)		$	47	$	(211)

120

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


	As of September 30, 2020		As of June 30, 2020
	(in millions)
Total assets:
Digital Real Estate Services	$	2,335	$	2,322
Subscription Video Services	3,513		3,459
Dow Jones	2,435		2,480
Book Publishing	2,233		2,212
News Media	2,075		1,994
Other(a)	1,495		1,497
Investments	314		297
Total assets	$	14,400	$	14,261

(a)The Other segment primarily includes Cash and cash equivalents.


	As of September 30, 2020		As of June 30, 2020
	(in millions)
Goodwill and intangible assets, net:
Digital Real Estate Services	$	1,567	$	1,555
Subscription Video Services	1,535		1,513
Dow Jones	1,719		1,722
Book Publishing	760		748
News Media	285		277
Total Goodwill and intangible assets, net	$	5,866	$	5,815

~~Segment information is summarized as follows:~~

For the three months
ended
December 31,

For the six months
ended
December 31,

2019

2018

2019

2018

(in millions)

Revenues:

News and Information Services
$
1,241
$
1,257
$
2,390
$
2,505

Subscription Video Services

501

562

1,015

1,127

Book Publishing

442

496

847

914

Digital Real Estate Services

294

311

566

604

Other

1

1

1

1

Total revenues
$
2,479
$
2,627
$
4,819
$
5,151

Segment EBITDA:

News and Information Services
$
142
$
112
$
198
$
221

Subscription Video Services

70

84

151

197

Book Publishing

63

88

112

156

Digital Real Estate Services

118

121

200

226

Other

(38
)
(35
)
(85
)
(72
)
Depreciation and amortization

(162
)
(163
)
(324
)
(326
)
Impairment and restructuring charges

(29
)
(19
)
(326
)
(37
)
Equity losses of affiliates

(3
)
(6
)
(5
)
(9
)
Interest expense, net

(8
)
(15
)
(4
)
(31
)
Other, net

2

7

6

27

Income (loss) before income tax expense

155

174

(77
)
352

Income tax expense

(52
)
(55
)
(31
)
(105
)

Net income (loss)
$
103
$
119
$
(108
) $
247

As of
December 31
, 2019

As of
June 30
, 2019

(in millions)

Total assets:

News and Information Services
$
5,638
$
5,482

Subscription Video Services

4,683

4,406

Book Publishing

2,214

2,074

Digital Real Estate Services

2,257

2,229

Other
(a)

1,165

1,185

Investments

325

335

Total assets
$
16,282
$
15,711

~~(a)~~

~~The Other segment primarily includes Cash and cash equivalents.~~

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

As of
December 31, 2019

As of
June 30, 2019

(in millions)

Goodwill and intangible assets, net:

News and Information Services
$
2,338
$
2,617

Subscription Video Services

2,552

2,595

Book Publishing

767

772

Digital Real Estate Services

1,576

1,589

Total Goodwill and intangible assets, net
$
7,233
$
7,573

NOTE ~~13.~~12. ADDITIONAL FINANCIAL INFORMATION

Receivables, net

Receivables are presented net of an allowance for doubtful accounts, which is an estimate of amounts that may not be collectible. The allowance for doubtful accounts is estimated based on historical experience, receivable aging, current and future economic trends and specific identification of certain receivables that are at risk of not being collected.

Receivables, net consist of:

As of
December 31, 2019

As of
June 30, 2019

(in millions)

Receivables
$
1,624
$
1,590

Allowance for doubtful accounts

(54
)
(46
)

Receivables, net
$
1,570
$
1,544


	As of September 30, 2020		As of June 30, 2020
	(in millions)
Receivables	$	1,315	$	1,276
Allowance for doubtful accounts	(75)		(73)
Receivables, net	$	1,240	$	1,203

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Other

Non-Current

Assets

The following table sets forth the components of Other

non-current

assets:


	As of December 31, 2019		As of June 30, 2019			As of September 30, 2020		As of June 30, 2020
	(in millions)					(in millions)
Royalty advances to authors	$	338	$	343	Royalty advances to authors	$	346	$	348
Retirement benefit assets		137		117	Retirement benefit assets	108		94
Inventory (a)		143		155	Inventory(a)	282		133
News America Marketing deferred consideration					News America Marketing deferred consideration	117		111
Other		330		315	Other	322		353

Total Other non-current assets	$	948	$	930	Total Other non-current assets	$	1,175	$	1,039

(a)The balance as of September 30, 2020 primarily consists of the non-current portion of programming rights. Upon adoption of ASU 2019-02, the Company reclassified the current portion of its programming rights, totaling $151 million, from Inventory, net to Other non-current assets. The Company’s programming rights are substantially all monetized as a film group.

~~(a)~~

~~Primarily consists of the~~

~~non-current~~

~~portion of programming rights.~~

Other Current Liabilities

The following table sets forth the components of Other current liabilities:


	As of September 30, 2020		As of June 30, 2020
	(in millions)
Royalties and commissions payable	$	198	$	169
Current operating lease liabilities	124		131
Allowance for sales returns	175		174
Current tax payable	66		50

Other	306		314
Total Other current liabilities	$	869	$	838

As of
December 31, 2019

As of
June 30, 2019

(in millions)

Royalties and commissions payable
$
218
$
211

Current operating lease liabilities
(a)

183

—

Allowance for sales returns

180

192

Current tax payable

19

22

Other

269

299

Total Other current liabilities
$
869
$
724

~~(a)~~

~~As a result of the adoption of ASU~~

~~2016-02~~

~~during the first quarter of fiscal 2020, the Company has included the current portion of its operating lease liabilities within Other current liabilities as of December 31, 2019.~~

Other, net

The following table sets forth the components of Other, net:


	For the three months ended September 30,
		2020		2019
		(in millions)
Remeasurement of equity securities		$	9	$	1
Dividends received from equity security investments		2		0

Other		6		3
Total Other, net		$	17	$	4

For the three months
ended
December 31,

For the six months
ended
December 31,

2019

2018

2019

2018

(in millions)

Dividends received from equity security investments
$
—
$
22
$
1
$
23

Remeasurement of equity securities

(6
)
(44
)
(5
)
(29
)
Gain on sale of Australian property

—

12

—

12

Other, net

8

17

10

21

Total Other, net
$
2
$
7
$
6
$
27

~~Table of Contents~~

~~NEWS CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

Supplemental Cash Flow Information

The following table sets forth the Company’s cash paid for taxes and interest:

For the six months ended
December 31,

2019

2018

(in millions)

Cash paid for interest
$
33
$
45

Cash paid for taxes

$
69

$
75


	For the three months ended September 30,
	2020	2019
	(in millions)
Cash paid for interest	16	16
Cash paid for taxes	23	27

Table of Contents

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE ~~14.~~13. SUBSEQUENT EVENTS

Elara

In ~~January~~October 2020, the Company sold Unruly to Tremor International Ltd (“Tremor”) for approximately 7% of Tremor’s outstanding shares. The transaction is subject to certain cash adjustments, and the Company agreed not to sell the Tremor shares for a period of 18 months after closing. At closing, the Company and Tremor entered into a three year commercial arrangement which granted Tremor the exclusive right to sell outstream video advertising on all of the Company’s digital properties in exchange for a total minimum revenue guarantee for News Corp of £30 million.

~~Febr~~

~~uary 2020, the Foxtel Debt~~REA Group entered into a ~~subordinated shareholder loan facility~~binding agreement ~~(the “Telstra Facility”) with Telstra, an ASX-listed telecommunications company which owns a 35%~~to increase its ownership interest in ~~Foxtel. The Telstra Facility provides Foxtel with up~~Elara. REA Group currently holds a 13.5% interest and on completion, is expected to ~~A$170 million that can be used to finance cable transmission costs due to Telstra under~~have a ~~services arrangement~~shareholding of between ~~Foxtel~~47.2% and ~~Telstra. The Telstra Facility bears interest at a variable rate~~61.1% and hold 5 of ~~Australian BBSY plus an applicable margin~~9 seats on Elara’s Board of ~~7.75% and matures in~~ ~~December 2027. The terms~~Directors. Upon completion of the ~~Telstra Facility allow~~transaction, REA Group will consolidate Elara's financial results. The total consideration for the ~~capitalization~~transaction at the REA Group level is expected to be between $50 million to $70 million, with $34.5 million to be paid in cash and the remainder in newly-issued REA Group shares. In connection with the transaction, News Corp will also increase its interest in Elara to 38.9% for a cash payment of ~~accrued~~$34.5 million. On a consolidated basis, News Corp is expected to hold an 86.1% to 100% combined interest in Elara upon completion. The transaction, which remains subject to confirmatory due diligence and the ~~principal outstanding.~~

renegotiation of key management employment contracts, is anticipated to be completed in the second quarter of fiscal 2021.

In February 2020, the Board of Directors declared a semi-annual cash dividend of $0.10 per share for Class A Common Stock and Class B Common Stock. This dividend is payable on April 15, 2020 to stockholders of record as of March 11, 2020.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This document, including the following discussion and analysis, contains statements that constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended. All statements that are not statements of historical fact are forward-looking statements. The words “expect,” “estimate,” “anticipate,” “predict,” “believe” and similar expressions and variations thereof are intended to identify forward-looking statements. These statements appear in a number of places in this discussion and analysis and include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things, trends affecting the Company’s financial condition or results of operations, including expected impacts from the ongoing novel coronavirus (“COVID-19”) pandemic and related public health measures, the Company’s strategy and strategic initiatives and the outcome of contingencies such as litigation and investigations. Readers are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and ~~uncertainties.~~uncertainties, including those related to COVID-19. More information regarding these risks and uncertainties (many of which may be amplified by COVID-19) and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth under the heading “Risk Factors” in Part I, Item 1A1A. in News Corporation’s Annual Report on Form

10-K

for the fiscal year ended June 30, ~~2019~~2020, as filed with the Securities and Exchange Commission (the “SEC”) on August ~~13, 2019~~11, 2020 (the ~~“2019~~“2020 Form

10-K”),

~~and Part II, Item 1A of this Form~~

~~10-Q,~~

and as may be updated in this and other subsequent Quarterly Reports on Form

10-Q.

The Company does not ordinarily make projections of its future operating results and undertakes no obligation (and expressly disclaims any obligation) to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Readers should carefully review this document and the other documents filed by the Company with the SEC. This section should be read together with the unaudited consolidated financial statements of News Corporation and related notes set forth elsewhere herein and the audited consolidated financial statements of News Corporation and related notes set forth in the ~~2019~~2020 Form

10-K.

INTRODUCTION

News Corporation (together with its subsidiaries, “News Corporation,” “News Corp,” the “Company,” “we,” or “us”) is a global diversified media and information services company comprised of businesses across a range of media, including: ~~news and information~~digital real estate services, subscription video services in Australia, news and information services and book ~~publishing~~publishing.

Certain reclassifications ~~were~~have been made to the prior period consolidated financial statements to conform to the current year presentation. Specifically, the Company reclassified certain costs at the ~~costs associated with certain initiatives~~Other segment that were previously included within the Other segment to the News and Information Services segment as these initiatives directly benefit this segment. For the three and six months ended December 31, 2018, these reclassifications increased Selling, general and administrative to Operating expenses. For the three months ended September 30, 2019, these reclassifications increased Operating expenses by ~~$8 million and $15 million, respectively, for the News and Information Services segment.~~$1 million.

The unaudited consolidated financial statements are referred to herein as the “Consolidated Financial Statements.” The consolidated statements of operations are referred to herein as the “Statements of Operations.��” The consolidated balance sheets are referred to herein as the “Balance Sheets.” The consolidated statements of cash flows are referred to herein as the “Statements of Cash Flows.” The Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

Management’s discussion and analysis of financial condition and results of operations is intended to help provide an understanding of the Company’s financial condition, changes in financial condition and results of operations. This discussion is organized as follows:

•Overview of the Company’s Businesses

—This section provides a general description of the Company’s businesses, as well as developments that occurred to date during fiscal ~~2020~~2021 that the Company believes are important in understanding its results of operations and financial condition or to disclose known trends.

Table of Contents

•Results of Operations

—This section provides an analysis of the Company’s results of operations for the three ~~and six~~ months ended ~~December 31, 2019~~September 30, 2020 and ~~2018.~~2019. This analysis is presented on both a consolidated basis and a segment basis. Supplemental revenue information is also included for reporting units within certain segments and is presented on a gross basis, before eliminations in consolidation. In addition, a brief description is provided of significant transactions and events that impact the comparability of the results being analyzed.

~~Table of Contents~~

•Liquidity and Capital Resources

—This section provides an analysis of the Company’s cash flows for the ~~six~~three months ended ~~December 31,~~September 30, 2020 and 2019, ~~and 2018,~~ as well as a discussion of the Company’s financial arrangements and outstanding commitments, both firm and contingent, that existed as of ~~December 31, 2019.~~

September 30, 2020.

OVERVIEW OF THE COMPANY’S BUSINESSES

The Company manages and reports its businesses in the following ~~five~~six segments:

~~News and Information~~•Digital Real Estate Services

~~The Wall Street Journal~~

property search and ~~Barron’s Group, which includes~~

~~Barron’s~~

~~The Australian~~

~~The Daily Telegraph~~

~~Herald Sun~~

~~The Courier Mail~~

~~and~~

~~The Advertiser~~

~~in Australia,~~

~~The Times~~

~~The Sunday Times~~

~~The Sun~~

~~and~~

~~The Sun on Sunday~~

~~in the U.K. and the~~

~~New York Post~~

~~in the U.S. This segment also includes News America Marketing,~~Move is a leading provider of

~~in-store~~

~~marketing products~~ digital real estate services in the U.S. and primarily operates realtor.com®, a premier real estate information and services ~~home-delivered shopper media~~marketplace. Move offers real estate advertising solutions to agents and ~~digital marketing solutions,~~brokers, including ~~Checkout 51’s mobile app,~~its ConnectionsSM Plus and AdvantageSM Pro products as well as ~~Wireless Group, operator~~its referral-based services. Move also offers a number of ~~talkSPORT, the leading sports radio network in the U.K.,~~professional software and ~~Storyful, a social media content agency.~~services products, including Top Producer® and ListHub™.

•Subscription Video Services

—The Company’s Subscription Video Services segment provides video sports, entertainment and news services to

pay-TV

subscribers and other commercial licensees, primarily via cable, satellite and internet distribution, and consists of (i) the Company’s 65% interest in Foxtel (with the remaining 35% interest in Foxtel held by Telstra, an ~~Australian Securities Exchange (“ASX”)-listed~~ASX-listed telecommunications company) and (ii) Australian News Channel (“ANC”). Foxtel is the largest

pay-TV

over-the-top,

or OTT, service that provides access across Foxtel's live and on-demand content, Kayo, ~~a sports-only~~its sports OTT service, and Binge, its recently launched on-demand entertainment OTT service.

ANC operates the SKY NEWS network, Australia’s

24-hour

•Dow Jones—The Dow Jones segment consists of Dow Jones, a global provider of news and business information, which distributes its content and data through a variety of media ~~websites.~~channels including newspapers, newswires, websites, applications, or apps, for mobile devices, tablets and e-book readers, newsletters, magazines, proprietary databases, live journalism, video and podcasts. Dow Jones’s products, which target individual consumer and enterprise customers, include The Wall Street Journal, Factiva, Dow Jones Risk & Compliance, Dow Jones Newswires, Barron’s and MarketWatch.

•Book Publishing

—The Book Publishing segment consists of HarperCollins, the second largest consumer book publisher in the world, with operations in 17 countries and particular strengths in general fiction, nonfiction, children’s and religious publishing. HarperCollins owns more than 120 branded publishing imprints, including Harper, William Morrow, HarperCollins Children’s Books, Avon, Harlequin and Christian publishers Zondervan and Thomas Nelson, and publishes works by well-known authors such as Harper Lee, Chip and Joanna Gaines, ~~Rick Warren,~~David Walliams, Angie Thomas, Sarah Young and Agatha Christie and popular titles such as

The Hobbit, Goodnight Moon, To Kill a Mockingbird, Jesus Calling

and

~~Hillbilly Elegy~~

The Hate U Give.

~~Digital Real Estate Services~~25

—The Digital Real Estate Services segment consists of the Company’s 61.6% interest in REA Group and 80% interest in Move. The remaining 20% interest in Move is held by REA Group. REA Group is a market-leading digital media business specializing in property and is listed on the ASX (ASX: REA). REA Group advertises property and property-related services on its websites and mobile apps across Australia and Asia, including Australia’s leading residential, commercial and share property websites, realestate.com.au, realcommercial.com.au, Flatmates.com.au and spacely.com.au, and property portals in Asia. In addition, REA Group provides property-related data to the financial sector and financial services through an

~~end-to-end~~

~~digital property search and financing experience and a mortgage broking offering.~~

Table of Contents

~~Move is a leading provider~~•News Media—The News Media segment consists primarily of ~~online real estate services~~News Corp Australia, News UK and the New York Post and includes, among other publications, The Australian, The Daily Telegraph, Herald Sun, The Courier Mail and The Advertiser in Australia and The Times, The Sunday Times, The Sun and The Sun on Sunday in the ~~U.S.~~U.K. This segment also includes Wireless Group, operator of talkSPORT, the leading sports radio network in the U.K., and ~~primarily operates realtor.com~~

,Storyful, a ~~premier real estate information and services marketplace. Move offers real estate advertising solutions to agents and brokers, including its Connections~~

~~Plus and Advantage~~

~~Pro products as well as its Opcity performance and subscription-based services. Move also offers a number~~social media content agency. The segment included News America Marketing until the completion of ~~professional software and services products, including Top Producer~~

~~and ListHub~~

the sale of the business on May 5, 2020.

•Other

—The Other segment consists primarily of general corporate overhead expenses, the corporate Strategy Group, ~~and~~ costs related to the U.K. Newspaper Matters (as defined in Note ~~10—~~9—Commitments and Contingencies to the Consolidated Financial ~~Statement). The~~Statements) and transformation costs associated with the Company’s ~~Strategy Group identifies new products and~~global shared services ~~across its businesses to increase revenues and profitability and targets and assesses potential acquisitions, investments and dispositions.~~program.

Other Business Developments

COVID-19 Impact

The impact of COVID-19 and measures to prevent its spread have continued to create significant economic volatility, uncertainty and disruption and have affected the Company’s businesses in a number of ways. During the three months ended September 30, 2020 and through the date of this filing, the Company observed the following effects on its businesses:

The real estate markets in Australia, Asia and the U.S. have been, and may continue to be, negatively impacted as a result of social distancing measures, business closures and economic uncertainty resulting from COVID-19, which has negatively impacted the Digital Real Estate Services segment. While real estate listings in Australia continued to be negatively impacted by government restrictions during the quarter, primarily in Melbourne, the overall decline in national new listings eased relative to last quarter and traffic to realestate.com.au remained strong. In October, national residential listings in Australia were down 1% compared to the prior year with improvement in both the Sydney and Melbourne markets. In the United States, the Company has seen stronger consumer traffic and higher leads in the quarter at Move driven by the easing of government imposed restrictions and increased buyer demand.

At its news and information services businesses, COVID-19 continued to exacerbate print advertising market weakness and negatively impact print volumes due to increased economic uncertainty and lower demand for single-copy and amenity newspapers driven by decreased foot traffic resulting from remote working, social distancing measures and other government restrictions. However, the Company has seen increases in digital paid subscribers as well as digital audience gains at online versions of many of its news properties.

Sports programming rights costs at the Subscription Video Services segment were negatively impacted by the deferral of costs from fiscal 2020 into fiscal 2021 due to the postponement of sporting events. The Company ~~previously announced~~estimates that ~~it was reviewing strategic options for News America Marketing,~~approximately $36 million of additional sports programming rights and production costs were recognized in the first quarter of fiscal 2021 due to such deferrals. In addition, the ongoing disruption in the operations of pubs and clubs and lower occupancy at hotels throughout Australia have continued to adversely impact commercial subscription revenues; however the Company has seen the gradual recovery of commercial subscribers which remains dependent on the easing of government restrictions and social distancing measures.

The ultimate impact of COVID-19, including the extent of adverse impacts on the Company’s business, results of operations, cash flows and financial condition, will depend on, among other things, the severity, duration, spread and any reoccurrence of COVID-19, the impact of governmental actions and business and consumer behavior in response to COVID-19, the effectiveness of actions taken to contain or mitigate the outbreak and prevent or limit any reoccurrence, the resulting global economic conditions and how quickly and to what extent normal economic and operating conditions can resume, all of which are highly uncertain and cannot be predicted. For additional information regarding risks related to COVID-19, please see “The ongoing novel coronavirus (COVID-19) pandemic and other similar epidemics, pandemics or widespread health crises could have a ~~potential sale,~~material adverse effect on the Company’s business, results of operations, cash flows and ~~is engaged~~financial position.” in ~~negotiations to sell~~Part I, Item 1A. of the ~~business. However, there is no assurance regarding~~2020 Form 10-K.

Regional and community newspapers in Australia

During the ~~timing or completion~~fourth quarter of ~~any transaction.~~

~~In January~~fiscal 2020, the Company ~~sold Unruly to Tremor International Ltd (“Tremor”)~~decommissioned the print operations for its regional and community newspapers in Australia. These initiatives will result in a revenue decrease at News Corp Australia of approximately 7%$111 million and have an immaterial impact on Segment EBITDA during fiscal 2021.

Table of Tremor’s outstanding shares. The transaction is subject to certain cash adjustments, and the Company agreed not to sell the Tremor shares for a period of 18 months after closing. At closing, the Company and TremorContents

Elara

In October 2020, REA Group entered into a ~~three year commercial arrangement which granted Tremor the exclusive right~~binding agreement to ~~sell outstream video advertising~~increase its ownership interest in Elara Technologies Pte. Ltd. (“Elara”). REA Group currently holds a 13.5% interest and on ~~all~~completion, is expected to have a shareholding of between 47.2% and 61.1% and hold five of nine seats on Elara’s Board of Directors. Upon completion of the ~~Company’s digital properties~~transaction, REA Group will consolidate Elara's financial results. The total consideration for the transaction at the REA Group level is expected to be between $50 million to $70 million, with $34.5 million to be paid in ~~exchange~~cash and the remainder in newly-issued REA Group shares. In connection with the transaction, News Corp will also increase its interest in Elara to 38.9% for a ~~total minimum revenue guarantee for~~cash payment of $34.5 million. On a consolidated basis, News Corp is expected to hold an 86.1% to 100% combined interest in Elara upon completion. The transaction, which remains subject to confirmatory due diligence and the renegotiation of ~~£30 million.~~

key management employment contracts, is anticipated to be completed in the second quarter of fiscal 2021.

~~Table of Contents~~

RESULTS OF OPERATIONS

Results of Operations—For the three ~~and six~~ months ended ~~December 31, 2019~~September 30, 2020 versus the three ~~and six~~ months ended ~~December 31, 2018~~September 30, 2019

The following table sets forth the Company’s operating results for the three ~~and six~~ months ended ~~December 31, 2019~~September 30, 2020 as compared to the three ~~and six~~ months ended ~~December 31, 2018.~~

For the three months ended December 31,

For the six months ended December 31,

2019

2018

Change

% Change

2019

2018

Change

% Change

(in millions, except %)

Better/(Worse)

Better/(Worse)

Revenues:

Circulation and subscription
$
990
$
1,029
$
(39
)
(4
)% $
1,985
$
2,063
$
(78
)
(4
)%
Advertising

677

718

(41
)
(6
)%
1,285

1,382

(97
)
(7
)%
Consumer

421

478

(57
)
(12
)%
808

878

(70
)
(8
)%
Real estate

242

248

(6
)
(2
)%
460

475

(15
)
(3
)%
Other

149

154

(5
)
(3
)%
281

353

(72
)
(20
)%

Total Revenues

2,479

2,627

(148
)
(6
)%
4,819

5,151

(332
)
(6
)%
Operating expenses

(1,350
)
(1,484
)
134

9
%
(2,687
)
(2,824
)
137

5
%
Selling, general and administrative

(774
)
(773
)
(1
)
—

(1,556
)
(1,599
)
43

3
%
Depreciation and amortization

(162
)
(163
)
1

1
%
(324
)
(326
)
2

1
%
Impairment and restructuring charges

(29
)
(19
)
(10
)
(53
)%
(326
)
(37
)
(289
)
**

Equity losses of affiliates

(3
)
(6
)
3

50
%
(5
)
(9
)
4

44
%
Interest expense, net

(8
)
(15
)
7

47
%
(4
)
(31
)
27

87
%
Other, net

2

7

(5
)
(71
)%
6

27

(21
)
(78
)%

Income (loss) before income tax expense

155

174

(19
)
(11
)%
(77
)
352

(429
)
**

Income tax expense

(52
)
(55
)
3

5
%
(31
)
(105
)
74

70
%

Net income (loss)

103

119

(16
)
(13
)%
(108
)
247

(355
)
**

Less: Net income attributable to noncontrolling interests

(18
)
(24
)
6

25
%
(34
)
(51
)
17

33
%

Net income (loss) attributable to News Corporation stockholders
$
85
$
95
$
(10
)
(11
)% $
(142
) $
196
$
(338
)
**

September 30, 2019.


	For the three months ended September 30,
		2020		2019		Change		% Change
(in millions, except %)				Better/(Worse)
Revenues:
Circulation and subscription		$	1,002	$	995	$	7	1	%
Advertising		332		608		(276)		(45)	%
Consumer		441		387		54		14	%
Real estate		235		218		17		8	%
Other		107		132		(25)		(19)	%
Total Revenues		2,117		2,340		(223)		(10)	%
Operating expenses		(1,164)		(1,338)		174		13	%
Selling, general and administrative		(685)		(781)		96		12	%
Depreciation and amortization		(164)		(162)		(2)		(1)	%
Impairment and restructuring charges		(40)		(297)		257		87	%
Equity losses of affiliates		(1)		(2)		1		50	%
Interest (expense) income, net		(8)		4		(12)		**
Other, net		17		4		13		**
Income (loss) before income tax (expense) benefit		72		(232)		304		**
Income tax (expense) benefit		(25)		21		(46)		**
Net income (loss)		47		(211)		258		**
Less: Net income attributable to noncontrolling interests		(13)		(16)		3		19	%
Net income (loss) attributable to News Corporation stockholders		$	34	$	(227)	$	261	**

** not meaningful

Revenues

— Revenues decreased ~~$148~~$223 million, or ~~6%, and $332 million, or 6%~~10%, for the three ~~and six~~ months ended ~~December 31, 2019, respectively,~~September 30, 2020 as compared to the corresponding ~~periods~~period of fiscal ~~2019.~~

~~The Revenue decrease for~~2020, primarily driven by the ~~three months ended December 31, 2019 was due in part to lower revenues at~~$200 million impact from the ~~Subscription Video Services segment~~sale of ~~$61 million, mainly due to lower subscription revenues resulting from lower broadcast subscribers and changes~~News America Marketing in the ~~subscriber package mix~~fourth quarter of fiscal 2020 and lower print advertising revenue in the ~~$25 million negative impact of foreign currency fluctuations. The decrease was also due to lower revenues at the Book Publishing segment of $54 million primarily due to lower sales of~~

~~Homebody: A Guide to Creating Spaces You Never Want to Leave~~

~~by Joanna Gaines,~~

~~Girl, Wash Your Face~~

~~by Rachel Hollis as well as lower sales of other backlist titles. Additionally, revenues at the Digital Real Estate Services and~~ News ~~and Information Services segments decreased $17 million and $16 million, respectively.~~Media segment. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a ~~Revenue decrease~~revenue increase of $50 million, or 2%, for the three months ended ~~December 31, 2019~~September 30, 2020 as compared to the corresponding period of fiscal ~~2019.~~2020.

~~Table of Contents~~

The Revenue decrease for the six months ended December 31, 2019 was due in part to lower revenues at the News and Information Services segment of $115 million, primarily due to weakness in the print advertising market, the $50 million negative impact of foreign currency fluctuations, the absence of the $48 million benefit related to News UK’s exit from the partnership for

~~Sun Bets~~

in the first quarter of fiscal 2019 and lower revenues at News America Marketing of $28 million, partially offset by price increases and digital subscriber growth across key mastheads. The decrease was also due to lower revenues at the Subscription Video Services segment of $112 million, primarily due to the $59 million negative impact of foreign currency fluctuations and lower subscription revenues, resulting from lower broadcast subscribers and changes in the subscriber package mix, partially offset by $38 million of higher revenues from Kayo and Foxtel Now. Additionally, revenues at the Book Publishing and Digital Real Estate Service segments decreased $67 million and $38 million, respectively. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a Revenue decrease of $134 million for the six months ended December 31, 2019 as compared to the corresponding period of fiscal 2019.

The Company calculates the impact of foreign currency fluctuations for businesses reporting in currencies other than the U.S. dollar by multiplying the results for each quarter in the current period by the difference between the average exchange rate for that quarter and the average exchange rate in effect during the corresponding quarter of the prior year and totaling the impact for all quarters in the current period.

Operating expenses

— Operating expenses decreased ~~$134~~$174 million, or ~~9%, and $137 million, or 5%~~13%, for the three ~~and six~~ months ended ~~December 31, 2019, respectively,~~September 30, 2020 as compared to the corresponding ~~periods~~period of fiscal ~~2019.~~

~~The decrease~~2020, primarily driven by the sale of News America Marketing in ~~Operating expenses for~~ the ~~three months ended December 31, 2019 was mainly due~~fourth quarter of fiscal 2020 as well as lower costs relating to ~~lower operating expenses at~~ the Subscription Video Services segment of $70 million, primarily resulting from lower entertainment programming costs, the $17 million positive impact of foreign currency fluctuations and lower transmission costs. The decrease in Operating expenses was also dueclosure or transition to lower expenses at the News and Information Services segment of $42 million, primarily due to cost savings initiatives, lower newsprint, production and distribution costs, the $22 million impact from the

~~one-time~~

~~benefit from the settlement~~digital of certain ~~warranty-related claims pertaining to previously incurred~~regional and ~~ongoing repairs and maintenance costs for News UK’s printing business and the $7 million positive impact~~community

Table of ~~foreign currency fluctuations.~~Contents

newspapers in Australia. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in an Operating expense ~~decrease~~increase of ~~$25~~$26 million, or 2%, for the three months ended ~~December 31, 2019~~September 30, 2020 as compared to the corresponding period of fiscal ~~2019.~~2020.

~~The decrease in Operating expenses~~Selling, general and administrative—Selling, general and administrative decreased $96 million, or 12%, for the ~~six~~three months ended December 31, 2019 was mainly due to lower operating expenses at the News and Information Services segment of $81 million, primarily due to cost savings initiatives, lower newsprint, production and distribution costs, the $25 million positive impact of foreign currency fluctuations and the $22 million impact from the

~~one-time~~

benefit from the settlement of certain warranty-related claims pertaining to previously incurred and ongoing repairs and maintenance costs for News UK’s printing business. The decrease was also due to lower operating expenses at the Subscription Video Services segment of $50 million, primarily due to the $39 million positive impact of foreign currency fluctuations, partially offset by higher operating expenses at the Digital Real Estate Services segment of $10 million, mainly due to the acquisition of and continued investment in Opcity. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in an Operating expense decrease of $69 million for the six months ended December 31, 2019September 30, 2020 as compared to the corresponding period of fiscal ~~2019.~~

~~Selling, general and administrative~~

~~—Selling, general and administrative increased $1 million~~

~~for~~2020, primarily driven by cost savings initiatives, the ~~three months ended December 31, 2019 and decreased $43 million, or 3%, for~~sale of News America Marketing in the ~~six months ended December 31, 2019, as compared to the corresponding periods~~fourth quarter of fiscal ~~2019.~~

~~The increase~~2020 and the impact from the sale of Unruly in ~~Selling, general and administrative for~~ the ~~three months ended December 31, 2019 was primarily due to higher expenses~~third quarter of $23 million at the Subscription Video Services segment, largely offset by lower expenses at the Digital Real Estate Services, News and Information Services and Book Publishing segments of $14 million, $4 million and $4 million, respectively.fiscal 2020. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a Selling, general and administrative ~~decrease~~increase of ~~$15~~$16 million, or 2%, for the three months ended ~~December 31, 2019~~September 30, 2020 as compared to the corresponding period of fiscal ~~2019.~~

2020.

~~Table of Contents~~

~~The decrease in Selling, general~~Depreciation and ~~administrative~~amortization— Depreciation and amortization expense increased $2 million, or 1%, for the ~~six~~three months ended ~~December 31, 2019 was~~September 30, 2020 as compared to the corresponding period of fiscal 2020, primarily due to ~~lower expenses of $22 million at~~ the Digital Real Estate Services segment, primarily due to lower marketing costs, and lower expenses at the Subscription Video Services segment of $16 million, primarily due to lower overhead costs and the $10 million positive impact of foreign currency fluctuations. The impact of foreign currency fluctuations of the U.S. dollar against local currencies, ~~resulted in a Selling, general and administrative decrease of $42 million for the six months ended December 31, 2019 as compared to the corresponding period of fiscal 2019.~~

~~Depreciation and amortization~~

— Depreciation and amortization expense decreased $1 million, or 1%, and $2 million, or 1%, for the three and six months ended December 31, 2019, respectively, as compared to the corresponding periods of fiscal 2019. The impact of foreign currency fluctuations of the U.S. dollar against local currencieswhich resulted in a depreciation and amortization expense ~~decrease~~increase of $5$4 million, ~~and $12 million for the three and six months ended December 31, 2019, respectively, as compared to the corresponding periods of fiscal 2019.~~or 2%.

Impairment and restructuring charges

— During the three and six months ended December 31, 2019, the Company recorded restructuring charges of $10 million and $34 million, respectively. During the three and six months ended December 31, 2018, the Company recorded restructuring charges of $19 million and $37 million, respectively.

During the three months ended ~~December 31,~~September 30, 2019, the Company recognized a

non-cash

~~impairment charge of $19 million related to a reporting unit in the News and Information Services segment.~~

~~During the six months ended December 31, 2019, the Company recognized~~

~~non-cash~~

impairment charges of ~~$292~~$273 million primarily related to the impairment of goodwill and indefinite-lived intangible assets at the News America Marketing reporting unit.

During the three months ended September 30, 2020 and 2019, the Company recorded restructuring charges of $40 million and $24 million, respectively. See Note 3—~~Impairment and~~ Restructuring ~~Charges~~Programs in the accompanying Consolidated Financial Statements.

Equity losses of affiliates

— Equity losses of affiliates ~~improved~~decreased by ~~$3 million and $4~~$1 million for the three ~~and six~~ months ended ~~December 31, 2019, respectively,~~September 30, 2020 as compared to the corresponding ~~periods~~period of fiscal ~~2019.~~2020. See Note 4—Investments in the accompanying Consolidated Financial Statements.

Interest ~~expense,~~(expense) income, net

— Interest expense, net ~~improved by $7~~was $8 million ~~and $27 million for the three and six months ended December 31, 2019, respectively, as compared to the corresponding periods of fiscal 2019. Interest expense, net improved~~ for the three months ended ~~December 31, 2019~~September 30, 2020 as compared to interest income, net of $4 million in the corresponding period of fiscal 2020, primarily due to ~~lower third party interest expense~~

~~resulting~~the absence of the impact from ~~repayments~~

~~of maturing debt facilities. Interest expense, net improved for the six months ended December 31, 2019 primarily due to~~ the settlement of cash flow hedges related to debt maturities ~~occurring~~ in the first quarter of fiscal ~~2020 and lower third party interest expense due to repayments of maturing debt facilities.~~2020.

Other, net

— Other, net ~~decreased~~increased by ~~$5 million and $21~~$13 million for the three ~~and six~~ months ended ~~December 31, 2019, respectively,~~September 30, 2020 as compared to the corresponding ~~periods~~period of fiscal ~~2019.~~2020. See Note ~~13—~~12—Additional Financial Information in the accompanying Consolidated Financial Statements.

Income tax ~~expense~~

(expense) benefit—For the three months ended ~~December 31, 2019,~~September 30, 2020, the Company recorded income tax expense of ~~$52~~$25 million on

pre-tax

For the ~~six~~three months ended ~~December 31,~~September 30, 2019, the Company recorded an income tax ~~expense~~benefit of ~~$31~~$21 million on a

pre-tax

~~For the three months ended December 31, 2018, the Company recorded income tax expense of $55 million on~~

~~pre-tax~~

~~Table of Contents~~

~~For the six months ended December 31, 2018, the Company recorded income tax expense of $105 million on~~

~~pre-tax~~

Management assesses available evidence to determine whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets. Based on management’s assessment of available evidence, it has been determined that it is more likely than not that ~~certain~~ deferred tax assets in U.S. ~~Federal, State~~federal, state and foreign jurisdictions may not be realized and therefore, a valuation allowance has been established against those tax assets.

The changing and volatile macro-economic conditions connected with COVID-19 may cause fluctuations in forecasted earnings before income taxes. As such, the Company’s effective tax rate could be subject to volatility as forecasted earnings before income taxes are impacted by events which are highly uncertain and cannot be predicted.

Net income (loss)

—Net income ~~(loss) deteriorated by $16 million and $355~~was $47 million for the three ~~and six~~ months ended ~~December 31, 2019, respectively,~~September 30, 2020 as compared to a net loss of $211 million in the corresponding ~~periods~~period of fiscal ~~2019.~~

~~The change~~2020, an improvement of $258 million, primarily driven by the decrease in ~~Net income during the three months ended December 31, 2019 was primarily due to lower Total Segment EBITDA.~~

~~The change in Net income (loss) during the six months ended December 31, 2019 was primarily due to~~

non-cash

impairment charges of $292 million primarily related to the impairment of goodwill and indefinite-lived intangible assets at News America Marketing and lower Total Segment EBITDA, partially offset by lower interest and tax expense.discussed above.

Table of Contents

Net income attributable to noncontrolling interests

—Net income attributable to noncontrolling interests decreased by $6$3 million, ~~and $17 million~~or 19%, for the three ~~and six~~ months ended ~~December 31, 2019,~~September 30, 2020 as compared to the corresponding ~~periods~~period of fiscal ~~2019.~~2020.

~~The decrease in Net income attributable to noncontrolling interests for the three and six months ended December 31, 2019 was primarily due to lower results at REA Group and Foxtel.~~

Segment Analysis

~~Table of Contents~~

Total Segment EBITDA is a

non-GAAP

measure and should be considered in addition to, not as a substitute for, net income (loss), cash flow and other measures of financial performance reported in accordance with GAAP. In addition, this measure does not reflect cash available to fund requirements and excludes items, such as depreciation and amortization and impairment and restructuring charges, which are significant components in assessing the Company’s financial performance. The Company believes that the presentation of Total Segment EBITDA provides useful information regarding the Company’s operations and other factors that affect the Company’s reported results. Specifically, the Company believes that by excluding certain

one-time

non-cash

items such as impairment and restructuring charges and depreciation and amortization, as well as potential distortions between periods caused by factors such as financing and capital structures and changes in tax positions or regimes, the Company provides users of its consolidated financial statements with insight into both its core operations as well as the factors that affect reported results between periods but which the Company believes are not representative of its core business. As a result, users of the Company’s consolidated financial statements are better able to evaluate changes in the core operating results of the Company across different periods.

The following table reconciles Net income (loss) to Total Segment EBITDA for the three ~~and six~~ months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~

For the three months
ended December 31,

For the six months ended
December 31,

2019

2018

2019

2018

(in millions, except %)

Net income (loss)
$
103
$
119
$
(108
) $
247

Add:

Income tax expense

52

55

31

105

Other, net

(2
)
(7
)
(6
)
(27
)
Interest expense, net

8

15

4

31

Equity losses of affiliates

3

6

5

9

Impairment and restructuring charges

29

19

326

37

Depreciation and amortization

162

163

324

326

Total Segment EBITDA
$
355
$
370
$
576
$
728

2019:


	For the three months ended September 30,
		2020		2019
(in millions)
Net income (loss)		$	47	$	(211)
Add:
Income tax expense (benefit)		25		(21)
Other, net		(17)		(4)
Interest expense (income), net		8		(4)
Equity losses of affiliates		1		2
Impairment and restructuring charges		40		297
Depreciation and amortization		164		162
Total Segment EBITDA		$	268	$	221

Table of Contents

The following ~~tables set~~table sets forth the Company’s Revenues and Segment EBITDA by segment for the three ~~and six~~ months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~

For the three months ended December 31,

2019

2018

Segment

Segment

(in millions)

Revenues

EBITDA

Revenues

EBITDA

News and Information Services
$
1,241
$
142
$
1,257
$
112

Subscription Video Services

501

70

562

84

Book Publishing

442

63

496

88

Digital Real Estate Services

294

118

311

121

Other

1

(38
)
1

(35
)

Total
$
2,479
$
355
$
2,627
$
370

2019:


	For the three months ended September 30,
	2020				2019
(in millions)	Revenues		Segment EBITDA		Revenues		Segment EBITDA
Digital Real Estate Services	$	290	$	119	$	272	$	82
Subscription Video Services	496		78		514		81
Dow Jones	386		72		382		49
Book Publishing	458		71		405		49
News Media	487		(22)		767		7
Other	—		(50)		—		(47)
Total	$	2,117	$	268	$	2,340	$	221

~~Table of Contents~~

For the six months ended December 31,

2019

2018

Segment

Segment

(in millions)

Revenues

EBITDA

Revenues

EBITDA

News and Information Services
$
2,390
$
198
$
2,505
$
221

Subscription Video Services

1,015

151

1,127

197

Book Publishing

847

112

914

156

Digital Real Estate Services

566

200

604

226

Other

1

(85
)
1

(72
)

Total
$
4,819
$
576
$
5,151
$
728

~~News~~Digital Real Estate Services (14% and ~~Information Services~~

~~(50% and 48%~~12% of the Company’s consolidated revenues in the ~~six~~three months ended ~~December 31,~~September 30, 2020 and 2019, ~~and 2018,~~ respectively)


	For the three months ended September 30,
		2020		2019		Change		% Change
(in millions, except %)				Better/(Worse)
Revenues:
Circulation and subscription		$	8	$	10	$	(2)	(20)	%
Advertising		28		27		1		4	%
Real estate		235		218		17		8	%
Other		19		17		2		12	%
Total Revenues		290		272		18		7	%
Operating expenses		(43)		(45)		2		4	%
Selling, general and administrative		(128)		(145)		17		12	%
Segment EBITDA		$	119	$	82	$	37	45	%

~~Revenues at the News and Information Services segment decreased $16 million, or 1%, for~~For the three months ended ~~December 31, 2019~~September 30, 2020, revenues at the Digital Real Estate Services segment increased $18 million, or 7%, as compared to the corresponding period of fiscal ~~2019.~~2020. Revenues at Move increased $15 million, or 12%, to $138 million for the three months ended September 30, 2020 from $123 million in the corresponding period of fiscal 2020, primarily driven by higher real estate revenues from the referral model, which benefited from higher lead volumes and higher average home values. Revenues from the referral model represented approximately 30% of total Move revenues. At REA Group, revenues increased $3 million, or 2%, to $152 million for the three months ended September 30, 2020 from $149 million in the corresponding period of fiscal 2020, primarily due to the $6 million positive impact of foreign currency fluctuations.

For the three months ended September 30, 2020, Segment EBITDA at the Digital Real Estate Services segment increased $37 million, or 45%, as compared to the corresponding period of fiscal 2020. The increase in Segment EBITDA was primarily driven by the $28 million higher contribution from Move resulting from the higher revenues discussed above and the impact of cost savings initiatives implemented in response to COVID-19 and the deferral of marketing costs at Move and REA Group.

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Subscription Video Services (23% and 22% of the Company’s consolidated revenues in the three months ended September 30, 2020 and 2019, respectively)


	For the three months ended September 30,
		2020		2019		Change		% Change
(in millions, except %)				Better/(Worse)
Revenues:
Circulation and subscription		$	437	$	451	$	(14)	(3)	%
Advertising		50		51		(1)		(2)	%
Other		9		12		(3)		(25)	%
Total Revenues		496		514		(18)		(4)	%
Operating expenses		(333)		(344)		11		3	%
Selling, general and administrative		(85)		(89)		4		4	%
Segment EBITDA		$	78	$	81	$	(3)	(4)	%

For the three months ended September 30, 2020, revenues at the Subscription Video Services segment decreased $18 million, or 4%, as compared to the corresponding period of fiscal 2020. The revenue decrease was primarily due to lower ~~Advertising~~subscription revenues ~~of $33~~resulting from fewer residential broadcast subscribers and the $14 million ~~mainly~~decline in commercial subscription revenues due to ~~weakness~~ongoing restrictions on pubs, clubs and other commercial venues due to COVID-19. The decreases in revenues were partially offset by the ~~print advertising market, primarily in Australia, lower revenues at News America Marketing of $7 million and the $7 million negative~~positive impact of foreign currency ~~fluctuations. Circulation~~fluctuations and ~~subscription~~$9 million of higher revenues ~~for the three months ended December 31, 2019 increased $15 million as compared to the corresponding period of fiscal 2019~~from OTT products, primarily ~~due to price increases, mainly in Australia~~Kayo and ~~the U.K., digital subscriber growth across key mastheads, led by~~

~~The~~

~~Wall Street Journal,~~

~~and higher professional information business revenues at Dow Jones led by Risk & Compliance. These increases were partially offset by print volume declines in Australia and in the U.K., primarily at~~

~~The Sun~~

~~, and the $6 million negative impact of foreign currency fluctuations.~~Binge. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue ~~decrease~~increase of ~~$15~~$20 million, or 3%, for the three months ended ~~December 31, 2019~~September 30, 2020 as compared to the corresponding period of fiscal ~~2019.~~2020.

~~Segment EBITDA at the News and Information Services segment increased $30 million, or 27%, for~~For the three months ended ~~December 31, 2019~~September 30, 2020, Segment EBITDA decreased $3 million, or 4%, as compared to the corresponding period of fiscal ~~2019.~~2020. The ~~increase~~Segment EBITDA decrease was ~~mainly due to higher contribution from News UK of $44 million~~ primarily due to ~~cost savings initiatives,~~the lower ~~newsprint, production and distribution costs and the $22 million impact from the~~

~~one-time~~

benefit from the settlement of certain warranty-related claims pertaining to previously incurred and ongoing repairs and maintenance costs. The increase was also due to higher contribution from Dow Jones of $4 million and lower losses at the

~~New York Post~~

~~of $4 million due to higher~~ revenues discussed above, partially offset by ~~lower contribution from~~

~~News Corp Australia of $8 million and from News America Marketing of $8 million~~cost savings primarily due to lower ~~revenues.~~entertainment programming, employee and transmission costs, as savings from renegotiated sports rights were more than offset by the recognition of sports programming rights and production costs deferred from the fourth quarter of fiscal 2020.

The following tables provide information regarding certain key performance indicators for Foxtel, the primary reporting unit within the Subscription Video Services segment, as of and for the three months ended September 30, 2020 and 2019 (see the Company’s 2020 Form 10-K for further detail regarding these performance indicators):


	As of September 30,
	2020	2019
	(in 000's)
Broadcast Subscribers
Residential(a)	1,850	2,059
Commercial(b)	205	267
OTT Subscribers (Total (Paid))
Foxtel Now(c)	310 (298 paid)	385 (375 paid)
Kayo(d)	681 (644 paid)	430 (364 paid)
Binge(e)	321 (290 paid)	—
Total Paid Subscribers	3,287	3,065


	For the three months ended September 30,
	2020	2019
Broadcast ARPU(f)	A$79 (US$56)	A$78 (US$53)
Broadcast Subscriber Churn(g)	14.6%	14.4%

(a) Subscribing households throughout Australia as of September 30, 2020 and 2019.

(b) Commercial subscribers throughout Australia as of September 30, 2020 and 2019. Commercial subscribers are calculated as residential equivalent business units and are derived by dividing total recurring revenue from these subscribers by an estimated average Broadcast ARPU which is held constant through the year.

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(c) Total and Paid Foxtel Now subscribers as of September 30, 2020 and 2019. Paid Foxtel Now subscribers excludes customers receiving service for no charge under certain new subscriber promotions.

~~Revenues~~(d) Total and Paid Kayo subscribers as of September 30, 2020 and 2019. Paid Kayo subscribers excludes customers receiving service for no charge under certain new subscriber promotions.

(e) Total and Paid Binge subscribers as of September 30, 2020.Binge was launched on May 25, 2020. Paid Binge subscribers excludes customers receiving service for no charge under certain new subscriber promotions.

(f) Average monthly broadcast residential subscription revenue per user (excluding Optus) (Broadcast ARPU) for the three months ended September 30, 2020 and 2019.

(g) Broadcast residential subscriber churn rate (excluding Optus) (Broadcast Subscriber Churn) for the three months ended September 30, 2020 and 2019. Broadcast subscriber churn represents the number of cable and satellite residential subscribers whose service is disconnected, expressed as a percentage of the average total number of cable and satellite residential subscribers, presented on an annual basis.

Dow Jones (18% and 16% of the Company’s consolidated revenues in the three months ended September 30, 2020 and 2019, respectively)


	For the three months ended September 30,
		2020		2019		Change		% Change
(in millions, except %)				Better/(Worse)
Revenues:
Circulation and subscription		$	311	$	289	$	22	8	%
Advertising		70		84		(14)		(17)	%
Other		5		9		(4)		(44)	%
Total Revenues		386		382		4		1	%
Operating expenses		(185)		(187)		2		1	%
Selling, general and administrative		(129)		(146)		17		12	%
Segment EBITDA		$	72	$	49	$	23	47	%

For the three months ended September 30, 2020, revenues at the ~~News and Information Services~~Dow Jones segment ~~decreased $115~~increased $4 million, or 5%1%, ~~for the six months ended December 31, 2019~~ as compared to the corresponding period of fiscal ~~2019. The revenue decrease was primarily due to lower Advertising~~2020 driven by growth in circulation and subscription revenues, ~~of $79 million mainly due to weakness in the print advertising market, primarily in Australia,~~

~~lower revenues at News America Marketing of $28 million and the $22 million negative~~

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~~impact of foreign currency fluctuations,~~ partially offset by ~~digital~~a decline in print advertising ~~growth, mainly in~~revenues. Digital revenues at the ~~U.K and Australia. Other~~Dow Jones segment represented 73% of total revenues for the ~~six~~three months ended ~~December 31, 2019 decreased $56 million~~September 30, 2020, as compared to 65% in the corresponding period of fiscal ~~2019 primarily due to the absence of the $48 million benefit related to News UK’s exit from the partnership for~~

~~Sun Bets~~

in the first quarter of fiscal 2019. Circulation and subscription revenues increased $20 million as compared to the corresponding period of fiscal 2019 primarily due to price increases, mainly in Australia and the U.K., digital subscriber growth across key mastheads, led by

~~The~~

~~Wall Street Journal,~~

~~The Sun,~~

~~and the $21 million negative impact of foreign currency fluctuations.~~2020. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue ~~decrease~~increase of ~~$50~~$1 million for the ~~six~~three months ended ~~December 31, 2019~~September 30, 2020 as compared to the corresponding period of fiscal ~~2019.~~2020.

~~Segment EBITDA at the News~~Circulation and ~~Information Services segment decreased $23~~subscription revenues


	For the three months ended September 30,
		2020		2019		Change		% Change
(in millions, except %)				Better/(Worse)
Circulation and subscription revenues:
Circulation and other		$	198	$	178	$	20	11	%
Professional information business		113		111		2		2	%
Total circulation and subscription revenues		$	311	$	289	$	22	8	%

Circulation and subscription revenues increased $22 million, or ~~10%~~8%, ~~for~~during the ~~six~~three months ended ~~December 31, 2019~~September 30, 2020 as compared to the corresponding period of fiscal ~~2019.~~ 2020. Circulation and other revenues increased $20 million, or 11%, primarily driven by growth in digital-only subscriptions at The Wall Street Journal and a $7 million increase in content licensing revenues,partially offset by print volume declines.During the three months ended September 30, 2020, average daily digital-only subscriptions at The Wall Street Journal increased 27% to 2.4 million as compared to the corresponding period of fiscal 2020, and digital revenues represented 63% of circulation revenue for the three months ended September 30, 2020, as compared to 56% in the corresponding period of fiscal 2020. Professional information business revenues increased $2 million, or 2%, as growth of $6 million in Risk & Compliance revenues was mostly offset by lower revenues from other professional information business products.

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The following table summarizes average daily consumer subscriptions during the three months ended September 30, 2020 and 2019 for select publications and for all consumer subscription products.(a)(b)


	For the three months ended September 30,
	2020	2019	Change	% Change
(in thousands, except %)			Better/(Worse)
The Wall Street Journal
Digital-only subscriptions(c)	2,354	1,854	500	27	%
Total subscriptions	3,104	2,618	486	19	%
Barron’s
Digital-only subscriptions(c)	458	321	137	43	%
Total subscriptions	667	587	80	14	%
Total Consumer(d)
Digital-only subscriptions(c)	2,914	2,259	655	29	%
Total subscriptions	3,877	3,296	581	18	%

________________________

(a)Based on internal data for the periods from June 29, 2020 to September 27, 2020 and July 1, 2019 through September 29, 2019, respectively, with independent assurance over global total sales and subscriptions provided by PricewaterhouseCoopers LLP UK.

(b)Subscriptions include individual consumer subscriptions, as well as subscriptions purchased by companies, schools, businesses and associations for use by their respective employees, students, customers or members. Subscriptions exclude single-copy sales and copies purchased by hotels, airlines and other businesses for limited distribution or access to customers.

(c)For some publications, including The Wall Street Journal and Barron’s, Dow Jones sells bundled print and digital products. For bundles that provide access to both print and digital products every day of the week, only one unit is reported each day and is designated as a print subscription. For bundled products that provide access to the print product only on specified days and full digital access, one print subscription is reported for each day that a print copy is served and one digital subscription is reported for each remaining day of the week.

(d)Total Consumer consists of The Wall Street Journal, Barron’s, MarketWatch newsletters and Financial News, including Private Equity News.

Advertising revenues

Advertising revenues decreased $14 million, or 17%, during the three months ended September 30, 2020 as compared to the corresponding period of fiscal 2020, primarily driven by the $19 million decrease in print advertising revenues resulting from general market weakness and lower volume across The Wall Street Journal and Barron’s due to COVID-19, partially offset by a $5 million increase in digital advertising revenue, which represented 57% of advertising revenue for the three months ended September 30, 2020, as compared to 42% in the corresponding period of fiscal 2020.

Segment EBITDA

For the three months ended September 30, 2020, Segment EBITDA at the Dow Jones segment increased $23 million, or 47%, as compared to the corresponding period of fiscal 2020. The increase was mainly due to lower contribution from News America Marketing and News Corp Australia of $21 million and $18 million, respectively, primarily due to lower revenues. The decrease was partially offset by higher contribution from Dow Jones of $14 million, primarily due to higher revenues, and higher contribution from News UK of $8 million primarily due to cost savings initiatives, lower newsprint, production and distribution costs, driven by lower print volumes, lower travel and entertainment costs due to COVID-19 and the ~~$22 million impact from the~~increase in revenues discussed above.

~~one-time~~

~~benefit from the settlement~~

Table of ~~certain warranty-related claims pertaining to previously incurred~~Contents

Book Publishing (22% and ~~ongoing repairs and maintenance costs, partially offset by the absence~~17% of the ~~$48~~Company’s consolidated revenues in the three months ended September 30, 2020 and 2019, respectively)


	For the three months ended September 30,
		2020		2019		Change		% Change
(in millions, except %)				Better/(Worse)
Revenues:
Consumer		$	441	$	387	$	54	14	%
Other		17		18		(1)		(6)	%
Total Revenues		458		405		53		13	%
Operating expenses		(304)		(279)		(25)		(9)	%
Selling, general and administrative		(83)		(77)		(6)		(8)	%
Segment EBITDA		$	71	$	49	$	22	45	%

For the three months ended September 30, 2020, revenues at the Book Publishing segment increased $53 million, ~~benefit related~~or 13%, as compared to the ~~exit from the partnership for~~

~~Sun Bets~~

~~in the first quarter~~corresponding period of fiscal ~~2019.~~

~~Dow Jones~~

~~Revenues were $433 million~~2020. The increase for the three months ended ~~December 31, 2019, an increase~~September 30, 2020 was primarily driven by the strong performance of ~~$16~~titles in the General Books category such as The Order by Daniel Silva, The Guest List by Lucy Foley and How to Destroy America in Three Easy Steps by Ben Shapiro, as well as higher backlist sales of children’s titles and the $9 million ~~or 4%,~~impact from the acquisition of a book publisher in Europe in the fourth quarter of fiscal 2020. Digital sales increased by 20% as compared to ~~revenues of $417 million in~~ the corresponding period of fiscal ~~2019. Circulation and subscription revenues increased $19 million,~~2020, primarily due to growth in both e-books and downloadable audiobooks. Digital sales represented approximately 23% of consumer revenues during the ~~$8 million impact from digital subscriber growth and digital subscription price increases at~~

~~The Wall Street Journal~~

, $8 million of higher professional information business revenues led by Risk & Compliance and higher content licensing revenue. Advertising revenues decreased $6 million, primarily due to weakness in the print advertising market and lower digital advertising revenue.three months ended September 30, 2020. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue ~~decrease~~increase of $1$4 million, or 1%, for the three months ended ~~December 31, 2019,~~September 30, 2020 as compared to the corresponding period of fiscal ~~2019.~~2020.

~~Revenues were $817 million for~~For the ~~six~~three months ended ~~December 31, 2019, an increase of $38~~September 30, 2020, Segment EBITDA at the Book Publishing segment increased $22 million, or 5%45%, as compared to the corresponding period of fiscal 2020. The increase was primarily due to the higher revenues discussed above and the mix of titles.

News Media (23% and 33% of the Company’s consolidated revenues in the three months ended September 30, 2020 and 2019, respectively)


	For the three months ended September 30,
		2020		2019		Change		% Change
(in millions, except %)				Better/(Worse)
Revenues:
Circulation and subscription		$	246	$	245	$	1	—	%
Advertising		184		446		(262)		(59)	%
Other		57		76		(19)		(25)	%
Total Revenues		487		767		(280)		(37)	%
Operating expenses		(299)		(483)		184		38	%
Selling, general and administrative		(210)		(277)		67		24	%
Segment EBITDA		$	(22)	$	7	$	(29)	**
** not meaningful

Revenues at the News Media segment decreased $280 million, or 37%, for the three months ended September 30, 2020 as compared to the corresponding period of fiscal 2020. The revenue decrease was primarily due to lower advertising revenues of ~~$779~~$262 million, driven by the sale of News America Marketing in the fourth quarter of fiscal 2020, which contributed $200 million to the decline, continued weakness in the print advertising market exacerbated by COVID-19 and the $29 million impact from the closure or transition to digital of regional and community newspapers in Australia. Other revenues for the three months ended September 30, 2020 decreased $19 million as compared to the corresponding period of fiscal 2020, primarily due to the $10 million impact from the sale of Unruly in January 2020. Circulation and subscription revenues increased $1 million as compared to the corresponding period of fiscal 2020 primarily due to digital subscriber growth across key mastheads, the $10 million positive impact of foreign currency fluctuations and price increases, partially offset by declines in print volume. The

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impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue increase of $19 million, or 2%, for the three months ended September 30, 2020 as compared to the corresponding period of fiscal 2020.

Segment EBITDA at the News Media segment declined $29 million for the three months ended September 30, 2020 as compared to the corresponding period of fiscal 2020. The decrease was due to the net $12 million impact from the sales of News America Marketing and Unruly in fiscal 2020 and to lower contributions from News Corp Australia and News UK of $13 million and $9 million, respectively, primarily driven by lower revenues, partially offset by cost savings initiatives.

News Corp Australia

Revenues were $221 million for the three months ended September 30, 2020, a decrease of $55 million, or 20%, compared to revenues of $276 million in the corresponding period of fiscal ~~2019.~~2020. The closure or transition to digital of regional and community newspapers in Australia resulted in a revenue decrease of $35 million. Advertising revenues decreased $52 million, primarily due to the closure or transition to digital of regional and community newspapers and continued weakness in the print advertising market exacerbated by COVID-19. Circulation and subscription revenues increased ~~$37~~$5 million, primarily ~~due to the $17 million impact from~~driven by digital subscriber growth and the positive impact from foreign currency fluctuations, which were mostly offset by print volume declines resulting from the closure or transition to digital ~~subscription price increases at~~

~~The Wall Street Journal~~

~~, as well as $16 million~~ of ~~higher professional information business revenues led by Risk & Compliance~~

~~Advertising revenues decreased $4 million, primarily due to weakness in the print advertising market.~~regional and community newspapers. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue ~~decrease~~increase of $3$9 million, or 3%, for the ~~six~~three months ended ~~December 31, 2019,~~September 30, 2020 as compared to the corresponding period of fiscal ~~2019.~~2020.

News ~~Corp Australia~~

Revenues were ~~$282~~$206 million for the three months ended ~~December 31, 2019,~~September 30, 2020, a decrease of ~~$27~~$17 million, or 9%8%, as compared to revenues of ~~$309~~$223 million in the corresponding period of fiscal ~~2019.~~2020. Advertising revenues decreased $13 million, primarily due to continued weakness in the print advertising market exacerbated by COVID-19. Circulation and subscription revenues decreased $1 million, primarily driven by single-copy volume declines at The Sun, partially offset by the $6 million positive impact of foreign currency fluctuations, digital subscriber growth, mainly at The Times, and cover price increases, mainly at The Sun. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue ~~decrease~~increase of ~~$14~~$9 million, or 5%4%, for the three months ended ~~December 31, 2019~~September 30, 2020 as compared to the corresponding period of fiscal 2019. Advertising revenues decreased $19 million, primarily due to the $22 million impact of weakness in the print advertising market and the $7 million negative impact of foreign currency fluctuations, partially offset by a $5 million increase due to digital advertising growth and a $4 million increase due to the acquisition of an integrated content marketing agency. Circulation and subscription revenues decreased $5 million primarily due to the $5 million negative impact of foreign currency fluctuations, as print volume declines were offset by cover price increases and digital subscriber growth.

Revenues were $558 million for the six months ended December 31, 2019, a decrease of $60 million, or 10%, compared to revenues of $618 million in the corresponding period of fiscal 2019. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue decrease of $32 million, or 5%, for the six months ended

~~December 31, 2019 as compared to the corresponding period of fiscal 2019. Advertising~~2020.

~~Table of Contents~~

revenues decreased $42 million, primarily due to the $45 million impact of weakness in the print advertising market and the $17 million negative impact of foreign currency fluctuations, partially offset by a $12 million increase due to the acquisition of an integrated content marketing agency and a $10 million increase due to digital advertising growth. Circulation and subscription revenues decreased $13 million primarily due to the $11 million negative impact of foreign currency fluctuations, as print volume declines were largely offset by cover price increases and digital subscriber growth.

~~News UK~~

Revenues were $259 million for the three months ended December 31, 2019, an increase of $5 million, or 2%, as compared to revenues of $254 million in the corresponding period of fiscal 2019. Advertising revenues increased $4 million, primarily due to digital advertising growth, mainly at

~~The Sun~~

~~, partially offset by weakness in the print advertising market~~

~~Circulation and subscription revenues decreased $2 million, mainly due to single-copy volume declines, primarily at~~

~~The Sun,~~

~~partially offset by cover price increases across mastheads and digital subscriber growth.~~

Revenues were $482 million for the six months ended December 31, 2019, a decrease of $58 million, or 11%, as compared to revenues of $540 million in the corresponding period of fiscal 2019. Other revenues decreased $53 million, mainly due to the absence of the $48 million benefit related to the exit from the partnership for

~~Sun Bets~~

in the first quarter of fiscal 2019. Circulation and subscription revenues decreased $9 million, primarily due to the $7 million negative impact of foreign currency fluctuations, as cover price increases across mastheads and digital subscriber growth mostly offset single-copy volume declines, primarily at

~~The Sun~~

~~. Advertising revenues increased $4 million, primarily due to digital advertising growth, mainly at~~

~~The Sun~~

, partially offset by the $4 million negative impact of foreign currency fluctuations and weakness in the print advertising market. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue decrease of $13 million, or 3%, for the six months ended December 31, 2019 as compared to the corresponding period of fiscal 2019.

~~News America Marketing~~

Revenues at News America Marketing were $191 million for the three months ended December 31, 2019, a decrease of $7 million, or 4%, as compared to revenues of $198 million in the corresponding period of fiscal 2019. The decrease was primarily related to $12 million of lower home delivered revenues, which include free-standing insert products, mainly due to lower volume.

Revenues at News America Marketing were $391 million for the six months ended December 31, 2019, a decrease of $28 million, or 7%, as compared to revenues of $419 million in the corresponding period of fiscal 2019. The decrease was primarily related to $32 million of lower home delivered revenues, which include free-standing insert products, mainly due to lower volume and rates.

~~Subscription Video Services~~

~~(21% and 22% of the Company’s consolidated revenues in the six months ended December 31, 2019 and 2018, respectively)~~

~~Table of Contents~~

For the three months ended December 31, 2019, revenues at the Subscription Video Services segment decreased $61 million, or 11%, as compared to the corresponding period of fiscal 2019. The revenue decrease for the three months ended December 31, 2019 was primarily due to lower subscription revenues resulting from lower broadcast subscribers and changes in the subscriber package mix and the $25 million negative impact of foreign currency fluctuations, partially offset by $18 million of higher revenues from Kayo and Foxtel Now.

For the three months ended December 31, 2019, Segment EBITDA decreased $14 million, or 17%, as compared to the corresponding period of fiscal 2019. The Segment EBITDA decrease for the three months ended December 31, 2019 was primarily due to the lower revenues discussed above, partially offset by lower entertainment programming and transmission costs.

For the six months ended December 31, 2019, revenues at the Subscription Video Services segment decreased $112 million, or 10%, as compared to the corresponding period of fiscal 2019. The revenue decrease for the six months ended December 31, 2019 was primarily due to the $59 million negative impact of foreign currency fluctuations and lower subscription revenues resulting from lower broadcast subscribers and changes in the subscriber package mix, partially offset by $38 million of higher revenues from Kayo and Foxtel Now.

For the six months ended December 31, 2019, Segment EBITDA decreased $46 million, or 23%, as compared to the corresponding period of fiscal 2019. The Segment EBITDA decrease for the six months ended December 31, 2019 was primarily due to the lower revenues discussed above, partially offset by lower overhead and transmission costs and the positive impact of foreign currency fluctuations on expenses.

~~Book Publishing~~

~~(17% and 18% of the Company’s consolidated revenues in the six months ended December 31, 2019 and 2018, respectively)~~

For the three months ended December 31,

For the six months ended December 31,

2019

2018

Change

% Change

2019

2018

Change

% Change

(in millions, except %)

Better/(Worse)

Better/(Worse)

Revenues:

Consumer
$
421
$
478
$
(57
)
(12
)% $
808
$
878
$
(70
)
(8
)%
Other

21

18

3

17
%
39

36

3

8
%

Total Revenues

442

496

(54
)
(11
)%
847

914

(67
)
(7
)%
Operating expenses

(297
)
(322
)
25

8
%
(576
)
(597
)
21

4
%
Selling, general and administrative

(82
)
(86
)
4

5
%
(159
)
(161
)
2

1
%

Segment EBITDA
$
63
$
88
$
(25
)
(28
)% $
112
$
156
$
(44
)
(28
)%

For the three months ended December 31, 2019, revenues at the Book Publishing segment decreased $54 million, or 11%, as compared to the corresponding period of fiscal 2019. The decrease for the three months ended December 31, 2019 was primarily due to lower sales of

~~Homebody: A Guide to Creating Spaces You Never Want to Leave~~

~~by Joanna Gaines,~~

~~Girl,~~

~~Wash Your Face~~

~~by Rachel Hollis,~~

~~The Hate U Give~~

~~by Angie Thomas and~~

~~The Subtle Art Of Not Giving A F*ck~~

~~by Mark Manson, as well as the $2 million negative impact of foreign currency fluctuations. The decrease was partially offset by strong sales of~~

~~The Pioneer Woman Cooks: The New Frontier~~

~~by Ree Drummond and~~

~~The Beast Of Buckingham Palace~~

by David Walliams. Digital sales represented approximately 19% of Consumer revenues during the three months ended December 31, 2019. Digital sales increased approximately 5% as compared to the corresponding period of fiscal 2019, primarily due to growth in downloadable audio books.

For the three months ended December 31, 2019, Segment EBITDA at the Book Publishing segment decreased $25 million, or 28%, as compared to the corresponding period of fiscal 2019. The decrease was primarily due to the lower revenues discussed above and the mix of titles.

For the six months ended December 31, 2019, revenues at the Book Publishing segment decreased $67 million, or 7%, as compared to the corresponding period of fiscal 2019. The decrease for the six months ended December 31, 2019 was primarily due to lower sales of

~~Homebody: A Guide to Creating Spaces You Never Want to Leave~~

~~by Joanna Gaines,~~

~~Girl,~~

~~Wash Your Face~~

~~by Rachel Hollis,~~

~~The Hate U Give~~

~~by Angie Thomas and~~

~~The Subtle Art Of Not Giving A F*ck~~

~~Mark Manson, as well as the $7 million negative impact of foreign currency fluctuations. The decrease was partially~~

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~~offset by strong sales of~~

~~The Pioneer Woman Cooks: The New Frontier~~

by Ree Drummond. Digital sales represented approximately 21% of Consumer revenues during the six months ended December 31, 2019. Digital sales decreased approximately 1% as compared to the corresponding period of fiscal 2019, primarily due to the lower revenues discussed above.

For the six months ended December 31, 2019, Segment EBITDA at the Book Publishing segment decreased $44 million, or 28%, as compared to the corresponding period of fiscal 2019. The decrease was primarily due to the lower revenues discussed above and the mix of titles.

~~Digital Real Estate Services~~

~~(12% of the Company’s consolidated revenues in the six months ended December 31, 2019 and 2018)~~

For the three months ended December 31, 2019, revenues at the Digital Real Estate Services segment decreased $17 million, or 5%, as compared to the corresponding period of fiscal 2019. At REA Group, revenues decreased $16 million, or 8%, to $173 million for the three months ended December 31, 2019 from $189 million in the corresponding period of fiscal 2019. The lower revenues were primarily due to the $8 million negative impact of foreign currency fluctuations, a decrease in Australian residential depth revenue driven by declines in listing volumes and lower developer revenue, partially offset by higher yield and improved product

mix in the residential business. Revenues at Move decreased $1 million, or 1%, to $121 million for the three months ended December 31, 2019 from $122 million in the corresponding period of fiscal 2019 primarily due to lower revenues from software and services, partially offset by higher real estate revenues.

For the three months ended December 31, 2019, Segment EBITDA at the Digital Real Estate Services segment decreased $3 million, or 2%, as compared to the corresponding period of fiscal 2019. The decrease in Segment EBITDA was primarily due to the $5 million negative impact of foreign currency fluctuations, as the lower revenues at REA Group discussed above were more than offset by lower costs at Move.

For the six months ended December 31, 2019, revenues at the Digital Real Estate Services segment decreased $38 million, or 6%, as compared to the corresponding period of fiscal 2019. At REA Group, revenues decreased $40 million, or 11%, to $322 million for the six months ended December 31, 2019 from $362 million in the corresponding period of fiscal 2019. The lower revenues were primarily due to a decrease in Australian residential depth revenue driven by declines in listing volumes, the $18 million negative impact of foreign currency fluctuations and lower developer revenue. Revenues at Move increased $4 million, or 2%, to $244 million for the six months ended December 31, 2019 from $240 million in the corresponding period of fiscal 2019 primarily due to

~~higher real estate revenues, partially offset by lower revenues from software and services.~~

For the six months ended December 31, 2019, Segment EBITDA at the Digital Real Estate Services segment decreased $26 million, or 12%, as compared to the corresponding period of fiscal 2019. The decrease in Segment EBITDA was primarily the result of the lower revenues at REA Group discussed above, the $16 million impact associated with the acquisition of and continued investment in Opcity and the $10 million negative impact of foreign currency fluctuations, partially offset by lower costs at Move.

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LIQUIDITY AND CAPITAL RESOURCES

Current Financial Condition

The Company’s principal source of liquidity is internally generated funds and cash and cash equivalents on hand. As of ~~December 31, 2019,~~September 30, 2020, the Company’s cash and cash equivalents were ~~$1.27~~$1.5 billion. ~~The Company expects these elements of liquidity will enable it to meet its liquidity needs in the foreseeable future, including repayment of indebtedness.~~ The Company also has available borrowing capacity under the 2019 News Corp Credit Facility (as defined below) and certain other facilities, as described below, and expects to have access to the worldwide credit and capital markets, subject to market conditions, in order to issue additional debt if needed or desired. The Company currently expects these elements of liquidity will enable it to meet its liquidity needs for at least the next 12 months, including repayment of indebtedness. However, the Company will continue to review its liquidity needs in light of the business and economic impacts resulting from COVID-19 and has taken various steps to offset the impact of COVID-19, including reducing variable costs and implementing cost savings initiatives across its businesses. Although the Company believes that its cash on hand and future cash from operations, together with its access to the credit and capital markets, will provide adequate resources to fund its operating and financing needs for at least the next 12 months, its access to, and the availability of, financing on acceptable terms in the future will be affected by many factors, including: (i) the financial and operational performance of the Company and/or its operating subsidiaries, as applicable, (ii) the Company’s credit ~~rating or absence of a credit rating~~ratings and/or the credit rating of its operating subsidiaries, as applicable, (iii) the provisions of any relevant debt instruments, credit agreements, indentures and similar or associated documents, (iv) the liquidity of the overall credit and capital markets and (v) the ~~current~~ state of the economy. ~~There~~Some of these factors may be adversely impacted by the COVID-19 pandemic and there can be no assurances that the Company will continue to have access to the credit and capital markets on acceptable terms. See Part ~~II,~~I, “Item 1A. Risk Factors” in the 2020 Form 10-K for further discussion.

As of ~~December 31, 2019,~~September 30, 2020, the Company’s consolidated assets included ~~$552~~$778 million in cash and cash equivalents that were held by its foreign subsidiaries. Of this amount, ~~$63~~$132 million is cash not readily accessible by the Company as it is held by REA Group, a majority owned but separately listed public company. REA Group must declare a dividend in order for the Company to have access to its share of REA Group’s cash balance. The Company earns income outside the U.S., which is deemed to be permanently reinvested in certain foreign jurisdictions. The Company does not currently intend to repatriate these earnings. Should the Company require more capital in the U.S. than is generated by and/or available to its domestic operations, the Company could elect to transfer funds held in foreign jurisdictions. The transfer of funds from foreign jurisdictions may be

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cumbersome due to local regulations, foreign exchange controls and taxes. Additionally, the transfer of funds from foreign jurisdictions may result in higher effective tax rates and higher cash paid for income taxes for the Company.

The principal uses of cash that affect the Company’s liquidity position include the following: operational expenditures including employee costs and paper purchases; capital expenditures; income tax payments; investments in associated entities; acquisitions; and the repayment of debt and related interest. In addition to the acquisitions and dispositions disclosed elsewhere, the Company has evaluated, and expects to continue to evaluate, possible future acquisitions and dispositions of certain businesses. Such transactions may be material and may involve cash, the issuance of the Company’s securities or the assumption of indebtedness.

Issuer Purchases of Equity Securities

In May 2013, the Company’s Board of Directors (the “Board of Directors”) authorized the Company to repurchase up to an aggregate of $500 million of its Class A Common Stock. No stock repurchases were made during the six months ended December 31, 2019 and 2018. Through January 31, 2020, the Company cumulatively repurchased approximately 5.2 million shares of Class A Common Stock for an aggregate cost of approximately $71 million. The remaining authorized amount under the stock repurchase program as of January 31, 2020 was approximately $429 million. All decisions regarding any future stock repurchases are at the sole discretion of a duly appointed committee of the Board of Directors and management. The committee’s decisions regarding future stock repurchases will be evaluated from time to time in light of many factors, including the Company’s financial condition, earnings, capital requirements and debt facility covenants, other contractual restrictions, as well as legal requirements, regulatory constraints, industry practice, market volatility and other factors that the committee may deem relevant. The stock repurchase authorization may be modified, extended, suspended or discontinued at any time by the Board of Directors and the Board of Directors cannot provide any assurances that any additional shares will be repurchased.

The Company did not purchase any of its Class A Common Stock or Class B Common Stock during the ~~six~~three months ended ~~December 31, 2019~~September 30, 2020 and ~~2018.~~2019.

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Dividends

In August ~~2019,~~ 2020, the Company’s Board of Directors (“the Board of ~~Directors~~Directors”) declared a semi-annual cash dividend of $0.10 per share for Class A Common Stock and Class B Common Stock. This dividend was paid on October ~~16, 2019~~14, 2020 to stockholders of record ~~at the close~~as of ~~business on~~ September 11, 2019. In August 2018, the Board of Directors declared a semi-annual cash dividend of $0.10 per share for Class A Common Stock and Class B Common Stock. This dividend was paid on October 17, 2018 to stockholders of record at the close of business on September 12, 2018.16, 2020. The timing, declaration, amount and payment of future dividends to stockholders, if any, is within the discretion of the Board of Directors. The Board of Directors’ decisions regarding the payment of future dividends will depend on many factors, including the Company’s financial condition, earnings, capital requirements and debt facility covenants, other contractual restrictions, as well as legal requirements, regulatory constraints, industry practice, market volatility and other factors that the Board of Directors deems relevant.

Sources and Uses of Cash—For the ~~six~~three months ended ~~December 31, 2019~~September 30, 2020 versus the ~~six~~three months ended ~~December 31, 2018~~September 30, 2019

Net cash provided by operating activities for the ~~six~~three months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ was as follows (in millions):


For the three months ended September 30,	2020		2019
Net cash provided by operating activities	$	155	$	27

For the six months ended December 31,

2019

2018

Net cash provided by operating activities
$
192
$
358

Net cash provided by operating activities ~~decreased~~increased by ~~$166~~$128 million for the ~~six~~three months ended ~~December 31, 2019~~September 30, 2020 as compared to the ~~six~~three months ended ~~December 31, 2018.~~September 30, 2019. The ~~decrease~~increase was primarily due to ~~lower~~higher Total Segment EBITDA and lower ~~cash distributions received from affiliates of $22 million.~~working capital.

Net cash used in investing activities for the ~~six~~three months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ was as follows (in millions):


For the six months ended December 31,	2019			2018
For the three months ended September 30,							For the three months ended September 30,	2020		2019
Net cash used in investing activities	$	(234	)	$	(409	)	Net cash used in investing activities	$	(96)	$	(118)

Net cash used in investing activities decreased by $22 million for the three months ended September 30, 2020, as compared to the three months ended September 30, 2019. During the ~~six~~three months ended ~~December 31, 2019,~~September 30, 2020, the Company used ~~$237~~$93 million of cash for capital expenditures, of which ~~$129~~$51 million related to Foxtel.

During the ~~six~~three months ended ~~December 31, 2018,~~September 30, 2019, the Company used ~~$264~~$117 million of cash for capital expenditures, of which ~~$139~~$66 million related to ~~Foxtel, and $185 million of cash for acquisitions, primarily for the acquisition of Opcity.~~Foxtel.

Net cash used in financing activities for the ~~six~~three months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ was as follows (in millions):


For the three months ended September 30,	2020		2019
Net cash used in financing activities	$	(50)	$	(95)

For the six months ended December 31,

2019

2018

Net cash used in financing activities
$
(328
) $
(333
)

Net cash used in financing activities decreased by $5$45 million for the ~~six~~three months ended ~~December 31, 2019,~~September 30, 2020, as compared to the ~~six~~three months ended ~~December 31, 2018.~~September 30, 2019. During the ~~six~~three months ended ~~December 31, 2019,~~September 30, 2020, the Company repaid ~~$1.2 billion~~$119 million of borrowings related to Foxtel and made dividend payments of $20 million to REA Group ~~which includes repayments made as part~~minority stockholders. The net cash used in financing activities was partially offset by new borrowings related to Foxtel of $123 million.

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During the ~~debt refinancings completed in~~three months ended September 30, 2019, the ~~second quarter~~Company repaid $290 million of ~~fiscal 2019,~~borrowings related to Foxtel and made dividend payments of ~~$81~~$22 million to ~~News Corporation stockholders and~~ REA Group minority stockholders. The net cash used in financing activities for the ~~six~~three months ended ~~December 31,~~September 30, 2019 was partially offset by new borrowings related to Foxtel ~~and REA Group~~ of ~~$917~~$199 million ~~which includes drawdowns under the new facilities entered into as part of the debt refinancings referenced above,~~ and the net settlement of hedges of $57 million. ~~See Note 5—Borrowings in the accompanying Consolidated Financial Statements.~~

During the six months ended December 31, 2018, the Company repaid borrowings of $470 million, mainly for Foxtel and at REA Group, made dividend payments of $81 million to News Corporation stockholders and REA Group minority stockholders and redeemed the Company’s redeemable preferred stock for $20 million. The net cash used in financing activities for the six months ended December 31, 2018 was partially offset by borrowings related to Foxtel of $263 million.

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Reconciliation of Free Cash Flow Available to News Corporation

Free cash flow available to News Corporation is a

non-GAAP

financial measure defined as net cash provided by operating activities, less capital expenditures (“free cash flow”), less REA Group free cash flow, plus cash dividends received from REA Group. Free cash flow available to News Corporation should be considered in addition to, not as a substitute for, cash flows from operations and other measures of financial performance reported in accordance with GAAP. Free cash flow available to News Corporation may not be comparable to similarly titled measures reported by other companies, since companies and investors may differ as to what items should be included in the calculation of free cash flow.

The Company considers free cash flow available to News Corporation to provide useful information to management and investors about the amount of cash that is available to be used to strengthen the Company’s balance sheet and for strategic opportunities including, among others, investing in the Company’s business, strategic acquisitions, dividend payouts and repurchasing stock. The Company believes excluding REA Group’s free cash flow and including dividends received from REA Group provides users of its consolidated financial statements with a measure of the amount of cash flow that is readily available to the Company, as REA Group is a separately listed public company in Australia and must declare a dividend in order for the Company to have access to its share of REA Group’s cash balance. The Company believes free cash flow available to News Corporation provides a more conservative view of the Company’s free cash flow because this presentation includes only that amount of cash the Company actually receives from REA Group, which has generally been lower than the Company’s unadjusted free cash flow.

A limitation of free cash flow available to News Corporation is that it does not represent the total increase or decrease in the cash balance for the period. Management compensates for the limitation of free cash flow available to News Corporation by also relying on the net change in cash and cash equivalents as presented in the Statements of Cash Flows prepared in accordance with GAAP which incorporate all cash movements during the period.

The following table presents a reconciliation of net cash provided by operating activities to free cash flow available to News Corporation:


	For the three months ended September 30,
	2020		2019
	(in millions)
Net cash provided by operating activities	$	155	$	27
Less: Capital expenditures	(93)		(117)
	62		(90)
Less: REA Group free cash flow	(29)		(28)
Plus: Cash dividends received from REA Group	32		35
Free cash flow available to News Corporation	$	65	$	(83)

For the six months ended December 31,

2019

2018

(in millions)

Net cash provided by operating activities
$
192
$
358

Less: Capital expenditures

(237
)
(264
)

(45
)
94

Less: REA Group free cash flow

(86
)
(105
)
Plus: Cash dividends received from REA Group

35

37

Free cash flow available to News Corporation
$
(96
) $
26

Free cash flow available to News Corporation ~~decreased~~increased by ~~$122~~$148 million in the ~~six~~three months ended ~~December 31, 2019~~September 30, 2020 to ~~($96)~~$65 million from ~~$26~~$(83) million in the corresponding period of fiscal ~~2019,~~2020, primarily due to ~~lower~~higher net cash provided by operating activities as discussed above ~~partially offset by~~and lower capital expenditures.

~~Free cash flow available to News Corporation has typically been higher in the second half of the fiscal year.~~

Borrowings

As of ~~December 31, 2019,~~September 30, 2020, the Company had total borrowings of ~~$1.2 billion.~~$1.3 billion, including the current portion and finance lease liabilities. The Company’s borrowings as of such date ~~reflect $1.0 billion~~primarily consisted of (i) $1,000 million of outstanding debt incurred by certain subsidiaries of NXE Australia Pty Limited (“Foxtel” and together with such subsidiaries, the “Foxtel Debt Group”) and (ii) $169 million of outstanding debt incurred by REA Group and certain of its subsidiaries (REA Group and such subsidiaries, the “REA Debt Group”). ~~In November 2019, the~~Both Foxtel ~~Debt~~and REA Group completed a debt refinancing in which it repaid its then existing credit facilities with the proceeds from a new A$610 million revolving credit facility maturing in November 2022 (the “2019 Credit Facility”), a new A$250 million term loan facility maturing in November 2024 (the “2019 Term Loan Facility”)are consolidated but non wholly-owned subsidiaries of News Corp, and the new A$200 million shareholder loan referenced below. In addition, the Foxtel Debt Group amended its 2017 Working Capital Facility which, among other things, extended the remaining term to three years, decreased the capacity under the facility from A$100 million to A$40 million and increased the applicable margin. The Foxtel Debt Grouptheir indebtedness ~~also includes U.S. private placement senior unsecured notes with maturities ranging from fiscal 2023 to 2025. The debt~~ is only guaranteed by ~~certain~~ members of the Foxtel Debt ~~Group. During the six months ended December 31, 2019, the Foxtel~~Group and REA Debt Group ~~had repayments~~and certain of ~~approximately $997 million, including the repayment of $150 million aggregate principal amount of senior unsecured notes maturing in July 2019, $75 million aggregate principal amount of~~their subsidiaries, respectively, and is non-recourse to News Corp.

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senior unsecured notes maturing in September 2019 and, in connection with the refinancing discussed above, the repayment of its outstanding borrowings under its A$200 million credit facility maturing in January 2020, its A$400 million credit facility maturing in July 2020, its A$400 million credit facility maturing in September 2021 and its 2017 Working Capital Facility. During the six months ended December 31, 2019, the Foxtel DebtREA Group had borrowings of approximately $800 million, including the full drawdown of amounts available under the 2019 Credit Facility and the 2019 Term Loan Facility. As of December 31, 2019, the Foxtel Debt Group had $11 million of undrawn commitments under the 2017 Working Capital Facility. The Company previously provided the Foxtel Debt Group with A$500 million of shareholder loans in fiscal 2019 andhas access to an A$~~200~~20 million ~~revolving credit~~overdraft facility ~~for working capital purposes during~~(the “2020 Overdraft Facility”). The 2020 Overdraft Facility is an uncommitted facility that will be reviewed annually by the first quarter of fiscal 2020. During the second quarter of fiscal 2020, the Company provided the Foxtel Debt Group with an additional A$200 million shareholder loan. The shareholder loans bear interest at a variable rate of the Australian BBSY plus an applicable margin ranging from 6.30% to 7.75%lender and ~~mature in December 2027. The shareholder revolving credit facility~~ bears interest at a ~~variable~~ rate based on the lender’s benchmark borrowing rate less a discount of 4.22%. The 2020 Overdraft Facility carries an annual facility fee of 0.15% of the ~~Australian BBSY plus an applicable margin ranging from 2.00%~~A$20 million overdraft limit. As of September 30, 2020, REA Group had not borrowed any funds under the 2020 Overdraft Facility. In October 2020, REA Group amended certain terms of its credit facilities to, ~~3.75%, depending on the Foxtel Debt Group’s~~among other things, require REA Group to maintain a net leverage ratio ~~and matures in July 2024. Additionally, in February 2020, the Foxtel Debt Group entered into an A$170 million subordinated shareholder loan facility agreement with Telstra which can be used~~of not more than 3.50 to ~~finance cable transmission costs due~~1.0 subsequent to ~~Telstra. The shareholder loan bears interest at a variable rate of the Australian BBSY plus an applicable margin of 7.75% and matures in December 2027.~~

~~The Company’s borrowings as of~~ December 31, ~~2019 also reflect the indebtedness of REA Group. REA Group~~2020.

The Company has outstanding borrowings of $168 million. During the second quarter of fiscal 2020, REA Group completed a debt refinancing in which it repaid the final A$240 million tranche of its A$480 million revolving loan facility with the proceeds of a new A$170 million unsecured syndicated revolving loan facility maturing in December 2021 (the “2019 REA Group Credit Facility”) and cash on hand. As of December 31, 2019, REA Group had drawn down the full A$170 million available under the 2019 REA Group Credit Facility.

~~In December 2019, the Company terminated its existing unsecured $650 million revolving credit facility, and entered into a new credit agreement (the “2019 Credit Agreement”) which provides for~~access to an unsecured $750 million revolving credit facility (the “2019 News Corp Credit Facility”) that can be used for general corporate purposes. The 2019 News Corp Credit Facility has a sublimit of $100 million available for issuances of letters of credit. ~~Under the 2019 Credit Agreement, the~~The Company may request increases in the amount of the facility up to a maximum amount of $1 billion. The lenders’ commitments to make the 2019 News Corp Credit Facility available terminate on December 12, 2024, and the Company may request that the commitments be extended under certain circumstances for up to two additional

one-year

periods. As of ~~December 31, 2019,~~September 30, 2020, the Company has not borrowed any funds under the 2019 News Corp Credit Facility.

~~The~~All of the Company’s borrowings contain customary representations, covenants and events of default. The Company was in compliance with all such covenants at ~~December 31, 2019.~~September 30, 2020.

See Note 5—Borrowings in the accompanying Consolidated Financial Statements for further details regarding the Company’s outstanding debt, including certain information about interest rates and maturities related to such debt arrangements.

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Commitments

The Company has commitments under certain firm contractual arrangements (“firm commitments”) to make future payments. These firm commitments secure the future rights to various assets and services to be used in the normal course of operations. As a result of the refinancing transactions that occurred during the three months ended December 31, 2019, the Company has presented its commitments associated with its borrowings and the related interest payments in the table below. See Note 5 —Borrowings in the accompanying Consolidated Financial Statements. The Company’s ~~remaining~~ commitments as of ~~December 31, 2019~~September 30, 2020 have not changed significantly from the disclosures included in the ~~2019~~2020 Form

10-K.

~~(a)~~

Contingencies

The Company routinely is involved in various legal proceedings, claims and governmental inspections or investigations, including those discussed in Note 109 to the Consolidated Financial Statements. The outcome of these matters and claims is subject to significant uncertainty, and the Company often cannot predict what the eventual outcome of pending matters will be or the timing of the ultimate resolution of these matters. Fees, expenses, fines, penalties, judgments or settlement costs which might be incurred by the Company in connection with the various proceedings could adversely affect its results of operations and financial condition.

The Company establishes an accrued liability for legal claims when it determines that a loss is both probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters. Legal fees associated with litigation and similar proceedings are expensed as incurred. The Company recognizes gain contingencies when the gain becomes realized or realizable. See Note ~~10 –~~ 9—Commitments and Contingencies in the accompanying Consolidated Financial Statements.

The Company’s tax returns are subject to

on-going

review and examination by various tax authorities. Tax authorities may not agree with the treatment of items reported in the Company’s tax returns, and therefore the outcome of tax reviews and examinations can be unpredictable. The Company believes it has appropriately accrued for the expected outcome of uncertain tax matters and believes such liabilities represent a reasonable provision for taxes ultimately expected to be paid. However, these liabilities may need to be adjusted as new information becomes known and as tax examinations continue to progress, or as settlements or litigations occur.

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ITEM

3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in the Company’s assessment of its sensitivity to market risk since its presentation set forth in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in the Company’s ~~2019~~2020 Form 10-K.

~~10-K.~~

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ITEM 4. CONTROLS AND PROCEDURES

~~(a)~~

~~Disclosure Controls and Procedures~~

(a)Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules

13a-15(e)

and

15(d)-15(e)

under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and were effective in ensuring that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

~~(b)~~

~~Internal Control Over Financial Reporting~~

(b)Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting (as such term is defined in Rules

13a-15(f)

and

15(d)-15(f)

under the Exchange Act) during the Company’s ~~second~~first quarter of fiscal ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II

ITEM 1. LEGAL PROCEEDINGS

~~The following supplements the discussion set forth under “Legal Proceedings”~~See Note 9—Commitments and Contingencies in the ~~Company’s 2019 Form~~

~~10-K.~~

~~Valassis Communications, Inc.~~

~~As reported in the 2019 Form~~

~~10-K,~~

Valassis Communications, Inc. (“Valassis”) filed a complaint in the U.S. District Court for the Eastern District of Michigan (the “District Court”) against News America Incorporated, News America Marketing FSI L.L.C., News America Marketing

~~In-Store~~

Services L.L.C. and News Corporation (together, the “NAM Group”) on November 8, 2013 alleging violations of federal and state antitrust laws and common law business torts, including unfair competition, and seeking treble damages, injunctive relief and attorneys’ fees and costs. NAM

~~In-Store~~

~~and NAM FSI asserted a counterclaim against Valassis for unfair competition, alleging that Valassis has engaged in the same practices that it alleges to be~~

~~unfair. In November 2019, the parties agreed to discontinue the unfair competition claim and counterclaim.~~

~~pre-trial~~

conference, the N.Y. District Court granted the NAM Group’s motion to exclude the testimony of Valassis’s sole damages expert. Valassis filed a motion for clarification or, in the alternative, reconsideration of the N.Y. District Court’s ruling. On February 6, 2020, the N.Y. District Court denied the motion for reconsideration but clarified that Valassis could seek the court’s permission to prove damages through evidence other than its expert’s excluded testimony. The N.Y. District Court has set a trial date of June 1, 2020. While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this action, the NAM Group believes it has been compliant with applicable laws and intends to defend itself vigorously.

accompanying Consolidated Financial Statements.

ITEM 1A.

RISK FACTORS

There have been no material changes to the risk factors described in the Company’s ~~2019~~2020 Form

10-K,

except as set forth below:

Certain FCC Rules and Regulations and the Separation and Distribution Agreement May Restrict the Company From Acquiring or Owning Certain Types of Assets in the U.S.

The Federal Communications Commission (“FCC”) has promulgated certain rules and regulations that limit the common ownership of radio and television broadcast stations and the common ownership of broadcast stations and newspapers (the “Broadcast Ownership Rules”) and place commercial restrictions on a cable network programmer in which a cable television operator holds an ownership interest (the “Program Access Rules”). In November 2017, the FCC voted to eliminate the Broadcast Ownership Rules, and the order became effective in February 2018. However, in September 2019, a panel of the U.S. Court of Appeals for the Third Circuit (the “Third Circuit”) issued an Order vacating the FCC’s order and reinstating the Broadcast Ownership Rules. The ~~FCC petitioned the Third Circuit~~FCC’s petition for en banc review was denied in November 2019, following which ~~the Third Circuit denied. Following the denial,~~ a mandate reinstating the Broadcast Ownership Rules was issued.

The FCC and certain other parties filed Petitions for Writ of Certiorari with the U.S. Supreme Court appealing the Third Circuit’s decision which were granted in October 2020.

Under the FCC’s rules for determining ownership of the media assets described above, the Murdoch Family Trust’s ownership interest in both the Company and FOX would generally result in each company’s businesses and assets being attributable to the Murdoch Family Trust for purposes of determining compliance with the Broadcast Ownership Rules and the Program Access Rules. Consequently, the Company may be restricted from taking advantage of certain acquisition or investment opportunities, including, for example, the acquisition of a newspaper in the same local market in which FOX owns or operates a television station. In addition, the Company agreed in the Separation and Distribution Agreement, as amended, that if it acquires newspapers, radio or television broadcast stations or television broadcast networks in the U.S. and such acquisition would impede or be reasonably likely to impede FOX’s business under the Broadcast Ownership Rules or any other federal statute or FCC rule that limits, directly or indirectly, the ownership or control of radio broadcast stations,

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television broadcast stations, newspapers and/or television broadcast networks, including FOX’s ability to own and operate its television stations or otherwise comply with such rules or statutes, then the Company will be required to take certain actions, including divesting assets, in order to permit FOX to hold its media interests and to comply with such rules or statutes. The Company also agreed not to acquire an interest in a multichannel video programming distributor, including a cable television operator, if such acquisition would subject FOX to the Program Access Rules to which it is not then subject. This agreement effectively limits the activities or strategic business alternatives available to the Company if such activities or strategic business alternatives implicate the Broadcast Ownership Rules or Program Access Rules or any other federal statute or FCC rule that limits, directly or indirectly, the ownership or control of radio broadcast stations, television broadcast stations, newspapers and/or television broadcast networks, and would impede or be reasonably likely to impede FOX’s business.

ITEM

2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

~~None.~~

ITEM

3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM

4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM

5. OTHER INFORMATION

Not applicable.

Table of Contents

ITEM 6. EXHIBITS

(a) Exhibits.


31.1
	~~10.1~~		News Corporation 2013 Long-Term Incentive Plan, as amended and restated effective November 20, 2019. (Incorporated by reference to Exhibit 10.1 to the Current Report of News Corporation on Form 8-K (File No. 001-35769) filed with the Securities and Exchange Commission on November 20, 2019.)

	~~10.2~~		Credit Agreement, dated as of December 12, 2019, among News Corporation, as administrative borrower, the lenders named therein, the initial issuing banks named therein, JPMorgan Chase Bank, N.A. as administrative agent, BofA Securities, Inc., Citibank, N.A. and Bank of China, New York Branch as syndication agents and JPMorgan Chase Bank, N.A., BofA Securities, Inc., Citibank, N.A. and Bank of China, New York Branch as joint lead arrangers and joint bookrunners. (Incorporated by reference to Exhibit 10.1 to the Current Report of News Corporation on Form 8-K (File No. 001-35769) filed with the Securities and Exchange Commission on December 13, 2019.)

	~~10.3~~		Syndicated Facility Agreement, dated as of November 14, 2019, among Foxtel Management Pty Limited, as initial borrower, the initial financiers named therein, the MLABs named therein and Commonwealth Bank of Australia, as facility agent.*

	~~10.4~~		Syndicated Facility Agreement, dated as of November 15, 2019, among Foxtel Management Pty Limited, as initial borrower, the initial financiers named therein, Goldman Sachs Australia Pty Ltd, as MLAB, and Commonwealth Bank of Australia, as facility agent.*

	~~10.5~~		Deed of Amendment, dated as of November 15, 2019, to the Multi-Option Facility Agreement, dated as of June 30, 2017, among Foxtel Management Pty Limited, Foxtel Finance Pty Limited and the other original borrowers listed therein and Commonwealth Bank of Australia, as the original lender.*

	~~10.6~~		Deed of Amendment, dated as of November 15, 2019, to the Common Terms Deed Poll, dated as of April 10, 2012, made by Foxtel Management Pty Ltd and the other parties thereto acting as initial guarantors in favor of the finance parties defined therein.*

	~~10.7~~		Guarantor Assumption Deed Poll, dated as of November 15, 2019, to the Common Terms Deed Poll, dated as of April 10, 2012, executed by each entity listed in the Schedule thereto.*

	~~10.8~~		Amendment No. 1 and Guarantee Agreement, dated as of November 22, 2019, to the Note and Guarantee Agreement, dated as of July 25, 2012, among Foxtel Management Pty Limited, Sky Cable Pty Limited, Foxtel Media Pty Limited (formerly Telstra Media Pty Limited), NXE Australia Pty Limited and others.*

	~~10.9~~		Amendment Deed, dated as of November 22, 2019, to the Deed of Guarantee, dated July 25, 2012, executed by each entity listed in Schedule 1 thereto.*

	~~10.10~~		Accession Deed Poll, dated as of November 22, 2019, to the Deed of Guarantee, dated July 25, 2012, executed by each entity listed in the Schedule thereto.*

	~~31.1~~		Chief Executive Officer Certification required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended.*

31.2		~~31.2~~		Chief Financial Officer Certification required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended.*

32.1		~~32.1~~		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002.**

~~Table of Contents~~



101		~~101~~		The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~December 31, 2019~~September 30, 2020 formatted in Inline XBRL: (i) Consolidated Statements of Operations for the three ~~and six~~ months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ (unaudited); (ii) Consolidated Statements of Comprehensive Income (Loss) for the three ~~and six~~ months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ (unaudited); (iii) Consolidated Balance Sheets as of ~~December 31, 2019~~September 30, 2020 (unaudited) and June 30, ~~2019~~2020 (audited); (iv) Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ (unaudited); and (v) Notes to the Unaudited Consolidated Financial Statements.*

104	~~104~~		The cover page from News Corporation’s Quarterly Report on Form 10-Q for the quarter ended ~~December 31, 2019,~~September 30, 2020, formatted in Inline XBRL (included as Exhibit 101).*

* Filed herewith.

*	~~Filed herewith.~~

**	** Furnished herewith

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		NEWS CORPORATION (Registrant)

~~By:~~	~~/s/ Susan Panuccio~~

		By:	/s/ Susan Panuccio
			Susan Panuccio Chief Financial Officer
			~~Chief Financial Officer~~
Date: November 6, 2020

~~Date: February 7, 2020~~

5942


			For the six months ended
			December 31,
	Notes		2019			2018
Operating activities:
Net (loss) income			$	(108	)	$	247
Adjustments to reconcile net (loss) income to cash provided by operating activities:
Depreciation and amortization				324			326
Operating lease expense		6		86			—
Equity losses of affiliates		4		5			9
Cash distributions received from affiliates				5			27
Impairment charges		3		292			—
Other, net		13		(6	)		(27	)
Deferred income taxes and taxes payable		11		(35	)		40
Change in operating assets and liabilities, net of acquisitions:
Receivables and other assets				(1,661	)		(140	)
Inventories, net				3			(43	)
Accounts payable and other liabilities				1,287			(81	)

Net cash provided by operating activities				192			358

Investing activities:
Capital expenditures				(237	)		(264	)
Acquisitions, net of cash acquired				(2	)		(185	)
Investments in equity affiliates and other				(8	)		(13	)
Proceeds from business dispositions				—			5
Proceeds from property, plant and equipment and other asset dispositions				10			32
Other, net				3			16

Net cash used in investing activities				(234	)		(409	)

Financing activities:
Borrowings		5		917			263
Repayment of borrowings		5		(1,161	)		(470	)
Dividends paid				(81	)		(81	)
Other, net				(3	)		(45	)

Net cash used in financing activities				(328	)		(333	)

Net change in cash and cash equivalents				(370	)		(384	)
Cash and cash equivalents, beginning of year				1,643			2,034
Exchange movement on opening cash balance				(1	)		(32	)

Cash and cash equivalents, end of year			$	1,272		$	1,618


	For the three months ended December 31, 2019
	News and Information Services		Subscription Video Services		Book Publishing		Digital Real Estate Services		Other		Total Revenues
	(in millions)
Revenues:
Circulation and subscription	$	541	$	439	$	—	$	9	$	1	$	990
Advertising		599		53		—		25		—		677
Consumer		—		—		421		—		—		421
Real estate		—		—		—		242		—		242
Other		101		9		21		18		—		149

Total Revenues	$	1,241	$	501	$	442	$	294	$	1	$	2,479


	For the three months ended December 31,						For the six months ended December 31,
	2019			2018			2019			2018
Balance, beginning of period	$	448		$	436		$	428		$	510
Deferral of revenue		754			742			1,575			1,337
Recognition of deferred revenue (a)		(797	)		(747	)		(1,591	)		(1,417	)
Other		6			(1	)		(1	)		—

Balance, end of period	$	411		$	430		$	411		$	430


	For the three months ended December 31,
	2019											2018
	One time											One time
	employee			Facility								employee			Facility
	termination			related								termination			related
	benefits			costs		Other costs			Total			benefits			costs		Other costs		Total
	(in millions)
Balance, beginning of period	$	22		$	—	$	10		$	32		$	23		$	2	$	11	$	36
Additions		10			—		—			10			19			—		—		19
Payments		(17	)		—		(1	)		(18	)		(21	)		—		—		(21	)
Other		1			—		—			1			(1	)		—		—		(1	)

Balance, end of period	$	16		$	—	$	9		$	25		$	20		$	2	$	11	$	33


	Interest rate at December 31, 2019			Maturity at December 31, 2019		As of December 31, 2019		As of June 30, 2019
						(in millions)
Foxtel Group
Credit facility 2014 — tranche 2 (a)		—			Jan 31, 2020	$	—	$	56
Credit facility 2015 (a)		—			Jul 31, 2020		—		281
Credit facility 2016 (a)		—			Sept 11, 2021		—		193
Credit facility 2019 (b) (c)		3.94	%		Nov 22, 2022		425		—
Term loan facility 2019 (d)		6.25	%		Nov 22, 2024		174		—
Working capital facility 201 7 (a) (c) (e) (f)		3.90	%		Nov 22, 2022		12		56
US private placement 2009 — tranche 3 ( g )		—			Sept 24, 2019		—		75
US private placement 2012 — USD portion — tranche 1 ( g )		—			Jul 25, 2019		—		150
US private placement 2012 — USD portion — tranche 2 ( h )		4.27	%		Jul 25, 2022		199		199
US private placement 2012 — USD portion — tranche 3 ( h )		4.42	%		Jul 25, 2024		148		149
US private placement 2012 — AUD portion		7.04	%		Jul 25, 2022		75		77
REA Group
Credit facility 2016 — tranche 3 ( i )		—			Dec 31, 2019		—		168
Credit facility 2018 ( j )		1.93	%		Apr 27, 2021		49		49
Credit facility 2019 (j) (k)		1.95	%		Dec 2, 2021		119		—
Total borrowings							1,201		1,453
Less: current portion ( l )							—		(449	)

Long-term borrowings						$	1,201	$	1,004


			For the three months ended December 31,		For the six months ended December 31,
	Income Statement Location		2019		2019
			(in millions)
Operating lease costs		Selling, general and administrative	$	51	$	99
Operating lease costs		Operating expenses		3		6
Short term lease costs		Operating expenses		3		5
Variable lease costs		Selling, general and administrative		10		19

Total lease costs			$	67	$	129


	As of December 31, 2019
Weighted-average remaining lease term		11.3 years
Weighted-average incremental borrowing rate		3.25	%

	For the six months ended December 31,
	2019
	(in millions)
Cash paid - Operating lease liabilities	$	116
Operating lease right-of-use asset obtained in exchange for operating lease liabilities	$	225


	As of December 31, 2019
	(in millions)
Fiscal 2020 (six months remaining)	$	119
Fiscal 2021		207
Fiscal 2022		206
Fiscal 2023		193
Fiscal 2024		177
Thereafter		968

Total future minimum lease payments		1,870
Less: interest		344

Present value of minimum payments	$	1,526


	For the three months ended December 31, 2019
														Accumulated
	Class A				Class B				Additional					Other			Total
	Common Stock				Common Stock				Paid-in		Accumulated			Comprehensive			News Corp			Non-controlling			Total
	Shares		Amount		Shares		Amount		Capital		Deficit			Loss			Equity			Interests			Equity
	(in millions)
Balance, September 30, 2019		388	$	4		200	$	2	$	12,174	$	(2,200	)	$	(1,266	)	$	8,714		$	1,115		$	9,829
Net income		—		—		—		—		—		85			—			85			18			103
Other comprehensive income		—		—		—		—		—		—			150			150			36			186
Dividends		—		—		—		—		—		—			—			—			—			—
Other		1		—		—		—		9		1			(1	)		9			—			9
Balance, December 31, 2019		389	$	4		200	$	2	$	12,183	$	(2,114	)	$	(1,117	)	$	8,958		$	1,169		$	10,127

	For the three months ended December 31, 2018
														Accumulated
	Class A				Class B				Additional					Other			Total
	Common Stock				Common Stock				Paid-in		Accumulated			Comprehensive			News Corp			Non-controlling			Total
	Shares		Amount		Shares		Amount		Capital		Deficit			Loss			Equity			Interests			Equity
	(in millions)
Balance, September 30, 2018		385	$	4		200	$	2	$	12,257	$	(2,032	)	$	(970	)	$	9,261		$	1,169		$	10,430
Net income		—		—		—		—		—		95			—			95			24			119
Other comprehensive loss		—		—		—		—		—		—			(106	)		(106	)		(28	)		(134	)
Dividends		—		—		—		—		—		—			—			—			—			—
Other		—		—		—		—		14		—			—			14			5			19
Balance, December 31, 2018		385	$	4		200	$	2	$	12,271	$	(1,937	)	$	(1,076	)	$	9,264		$	1,170		$	10,434


	Gain (loss) recognized in Accumulated						(Gain) loss reclassified from Accumulated
	other comprehensive loss for the three months ended						other comprehensive loss for the three months ended						Income statement
	December 31,						December 31,						location
	2019			2018			2019			2018
	(in millions)
Derivative instruments designated as cash flow hedges:
Foreign currency derivatives - cash flow hedges	$	(1	)	$	2		$	—		$	(1	)	Operating expenses
Cross currency interest rate derivatives - cash flow hedges		(13	)		30			12			(26	)	Interest expense, net
Interest rate derivatives - cash flow hedges		1			(1	)		1			2		Interest expense, net

Total	$	(13	)	$	31		$	13		$	(25	)


	Gain (loss) recognized in Accumulated						(Gain) loss reclassified from Accumulated
	o ther c omprehensive l oss for the six months ended						o ther c omprehensive l oss for the six months ended						Income statement
	December 31,						December 31,						location
	2019			2018			2019			2018
	(in millions)
Derivative instruments designated as cash flow hedges:
Foreign currency derivatives - cash flow hedges	$	(2	)	$	4		$	(2	)	$	(2	)	Operating expenses
Cross currency interest rate derivatives - cash flow hedges		(8	)		16			3			(12	)	Interest expense, net
Interest rate derivatives - cash flow hedges		(3	)		(2	)		(5	)		4		Interest expense, net

Total	$	(13	)	$	18		$	(4	)	$	(10	)


	For the three months ended December 31,						For the six months ended December 31,
	2019			2018			2019			2018
	(in millions, except per share amounts)
Net income (loss)	$	103		$	119		$	(108	)	$	247
Less: Net income attributable to noncontrolling interests		(18	)		(24	)		(34	)		(51	)
Net income (loss) attributable to News Corporation stockholders	$	85		$	95		$	(142	)	$	196
Weighted-average number of shares of common stock outstanding - basic		588.2			584.9			587.4			584.4
Dilutive effect of equity awards (a)		2.1			2.2			—			1.9
Weighted-average number of shares of common stock outstanding - diluted		590.3			587.1			587.4			586.3
Net income (loss) attributable to News Corporation stockholders per share - basic	$	0.15		$	0.16		$	(0.24	)	$	0.34
Net income (loss) attributable to News Corporation stockholders per share - diluted	$	0.14		$	0.16		$	(0.24	)	$	0.33


	As of December 31, 2019
	Payments Due by Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in millions)
Borrowings	$	1,199	$	—	$	875	$	324	$	—
Interest payments on borrowings (a)	$	170	$	50	$	89	$	31	$	—


	As of December 31 , 2019		As of June 30 , 2019
	(in millions)
Total assets:
News and Information Services	$	5,638	$	5,482
Subscription Video Services		4,683		4,406
Book Publishing		2,214		2,074
Digital Real Estate Services		2,257		2,229
Other (a)		1,165		1,185
Investments		325		335
Total assets	$	16,282	$	15,711


	For the six months ended December 31,
	2019		2018
	(in millions)
Cash paid for interest	$	33	$	45
Cash paid for taxes	$	69	$	75