UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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, ~~2018~~2019

☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period fromto

Commission file number 001-38776

FOX CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware		83-1825597
(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)

Registrant’s telephone number, including area code (212) 852-7000

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


Title of Each Class	Trading Symbols	Name of Each Exchange on Which Registered
Class A Common Stock, par value $0.01 per share	FOXA	The Nasdaq Global Select Market
Class B Common Stock, par value $0.01 per share	FOX	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 ☐☒ No ☒☐

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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging 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	☒
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 of the Exchange Act). Yes ☒☐ No ☐☒

As of ~~March 18, 2019, none~~February 4, 2020, 344,808,708 shares of ~~the voting stock of the registrant was held by a non-affiliate of the registrant~~Class A Common Stock, par value $0.01 per share, and there was no publicly traded market for any class of voting stock of the registrant. As of March 18, 2019, Twenty-First Century Fox, Inc. was the sole holder of record of the registrant’s equity and held one share262,024,419 shares of Class B Common Stock, par value $0.01 per share, ~~of the registrant.~~were outstanding.

FOX CORPORATION

FORM 10-Q

TABLE OF CONTENTS

			Page
Part I. Financial Information
	Item 1.	Financial Statements
		Unaudited Consolidated and Combined Statements of Operations for the three and six months ended December 31, 2019 and 2018 ~~and 2017~~	1
		Unaudited Consolidated and Combined Statements of Comprehensive Income for the three and six months ended December 31, ~~2018~~2019 and ~~2017~~2018	2
		~~Combined~~Consolidated Balance Sheets as of December 31, ~~2018~~2019 (unaudited) and June 30, ~~2018~~2019 (audited)	3
		Unaudited Consolidated and Combined Statements of Cash Flows for the six months ended December 31, 2019 and 2018 ~~and 2017~~	4
		Unaudited Consolidated and Combined Statements of Equity for the three and six months ended December 31, 2019 and 2018	5
		Notes to the Unaudited Consolidated and Combined Financial Statements	56
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2124
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3135
	Item 4.	Controls and Procedures	3135
Part II. Other Information
	Item 1.	~~Legal Proceedings~~	32
	~~Item~~ 1A.	Risk Factors	3336
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3437
	Item 3.	Defaults Upon Senior Securities	3437
	Item 4.	Mine Safety Disclosures	3437
	Item 5.	Other Information	3437
	Item 6.	Exhibits	3538
	Signature		3639

FOX CORPORATION

UNAUDITED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

	For the three months ended December 31,						For the six months ended December 31,
	2019			2018			2019			2018
Revenues	$	3,778		$	3,583		$	6,445		$	6,124
Operating expenses		(3,091	)		(2,818	)		(4,559	)		(4,309	)
Selling, general and administrative		(431	)		(329	)		(783	)		(628	)
Depreciation and amortization		(57	)		(51	)		(107	)		(94	)
Impairment and restructuring charges		-			-			(9	)		-
Interest expense		(90	)		(15	)		(180	)		(31	)
Interest income		8			-			25			-
Other, net		302			(339	)		287			(200	)

Income before income tax expense		419			31			1,119			862
Income tax expense		(105	)		(7	)		(292	)		(223	)

Net income		314			24			827			639

Less: Net income attributable to noncontrolling interests		(14	)		(16	)		(28	)		(27	)

Net income attributable to Fox Corporation stockholders	$	300		$	8		$	799		$	612

EARNINGS PER SHARE DATA

Weighted average shares
Basic		617			621			619			621
Diluted		620			621			622			621

Net income attributable to Fox Corporation stockholders per share
Basic	$	0.49		$	0.01		$	1.29		$	0.99
Diluted	$	0.48		$	0.01		$	1.28		$	0.99

The accompanying notes are an integral part of these Unaudited Consolidated and Combined Financial Statements.

FOX CORPORATION

UNAUDITED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME

(IN MILLIONS)

For the three months ended December 31,

For the six months ended December 31,

2018

2017

2018

2017

Revenues

$
3,583

$
3,108

$
6,124

$
5,296

Operating expenses

(2,818
)

(2,346
)

(4,309
)

(3,610
)
Selling, general and administrative

(329
)

(309
)

(628
)

(572
)
Depreciation and amortization

(51
)

(42
)

(94
)

(83
)
Interest expense

(15
)

(6
)

(31
)

(13
)
Other, net

(339
)

(93
)

(200
)

(95
)

Income before income tax (expense) benefit

31

312

862

923

Income tax (expense) benefit

(7
)

570

(223
)

359

Net income

24

882

639

1,282

Less: Net income attributable to noncontrolling interests

(16
)

(13
)

(27
)

(23
)

Net income attributable to Fox Corporation

$
8

$
869

$
612

$
1,259

	For the three months ended December 31,						For the six months ended December 31,
	2019			2018			2019			2018
Net income	$	314		$	24		$	827		$	639
Other comprehensive income, net of tax
Benefit plan adjustments		8			2			12			3
								-
Other comprehensive income, net of tax		8			2			12			3

Comprehensive income		322			26			839			642

Less: Net income attributable to noncontrolling interests^(a)		(14	)		(16	)		(28	)		(27	)

Comprehensive income attributable to Fox Corporation stockholders	$	308		$	10		$	811		$	615

^(a)

Net income attributable to noncontrolling interests includes $3 million and $10 million for the three months ended December 31, 2019 and 2018, respectively, and $12 million and $21 million for the six months ended December 31, 2019 and 2018, respectively, relating to redeemable noncontrolling interests.

The accompanying notes are an integral part of these Unaudited Consolidated and Combined Financial Statements.

FOX CORPORATION

~~UNAUDITED COMBINED STATEMENTS OF COMPREHENSIVE INCOME~~CONSOLIDATED BALANCE SHEETS

(IN ~~MILLIONS)~~MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)

For the three months ended December 31,

For the six months ended December 31,

2018

2017

2018

2017

Net income

$
24

$
882

$
639

$
1,282

Other comprehensive income, net of tax

Unrealized holding gains on securities

-

96

-

177

Benefit plan adjustments

2

2

3

3

-

Other comprehensive income, net of tax

2

98

3

180

Comprehensive income

26

980

642

1,462

Less: Net income attributable to noncontrolling interests^(a)

(16
)

(13
)

(27
)

(23
)

Comprehensive income attributable to Fox Corporation

$
10

$
967

$
615

$
1,439

	As of December 31, 2019			As of June 30, 2019
	(unaudited)			(audited)
ASSETS
Current assets
Cash and cash equivalents	$	1,991		$	3,234
Receivables, net		2,733			1,967
Inventories, net		1,544			1,129
Other		130			148

Total current assets		6,398			6,478

Non-current assets
Property, plant and equipment, net		1,330			1,313
Intangible assets, net		2,911			2,851
Goodwill		2,991			2,691
Deferred tax assets		4,398			4,651
Other non-current assets		2,422			1,525

Total assets	$	20,450		$	19,509

LIABILITIES AND EQUITY
Current liabilities
Accounts payable, accrued expenses and other current liabilities	$	1,816		$	1,712

Total current liabilities		1,816			1,712

Non-current liabilities
Borrowings		6,753			6,751
Other liabilities		1,312			899
Redeemable noncontrolling interests		216			189
Commitments and contingencies
Equity
Class A common stock^(a)		3			4
Class B common stock^(b)		3			3
Additional paid-in capital		9,849			9,891
Retained earnings		775			357
Accumulated other comprehensive loss		(296	)		(308	)

Total Fox Corporation stockholders' equity		10,334			9,947
Noncontrolling interests		19			11

Total equity		10,353			9,958

Total liabilities and equity	$	20,450		$	19,509

^(a)

~~Net income attributable to noncontrolling interests includes $10 million~~Class A common stock, $0.01 par value per share, 2,000,000,000 shares authorized, 346,509,519 shares and ~~$13 million for the three months ended~~354,422,419 shares issued and outstanding at par as of December 31, ~~2018~~2019 and ~~2017, respectively, and $21 million and $23 million for the six months ended December 31, 2018 and 2017, respectively, relating to redeemable noncontrolling interests.~~June 30, 2019, respectively.

^(b)	Class B common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 264,013,196 and 266,173,651 shares issued and outstanding at par as of December 31, 2019 and June 30, 2019, respectively.

The accompanying notes are an integral part of these Unaudited Consolidated and Combined Financial Statements.

FOX CORPORATION

UNAUDITED CONSOLIDATED AND COMBINED ~~BALANCE SHEETS~~STATEMENTS OF CASH FLOWS

(IN MILLIONS)

As of
December 31,
2018

As of
June 30,
2018

(unaudited)

(audited)

ASSETS

Current assets

Cash and cash equivalents

$
1,951

$
2,500

Receivables, net

2,438

1,833

Inventories, net

1,422

1,180

Other

66

67

Total current assets

5,877

5,580

Non-current assets

Property, plant and equipment, net

1,150

1,169

Intangible assets, net

2,859

2,866

Goodwill

2,747

2,747

Other non-current assets

833

759

Total assets

$
13,466

$
13,121

LIABILITIES AND EQUITY

Current liabilities

Accounts payable, accrued expenses and other current liabilities

$
1,241

$
1,759

-

Total current liabilities

1,241

1,759

Non-current liabilities

Other liabilities

607

422

Deferred income taxes

1,106

1,071

Redeemable noncontrolling interests

106

275

Commitments and contingencies

Equity

Twenty-First Century Fox, Inc. investment

10,596

9,513

Accumulated other comprehensive (loss) income

(202
)

81

-

Total Fox Corporation equity

10,394

9,594

Noncontrolling interests

12

-

Total equity

10,406

9,594

Total liabilities and equity

$
13,466

$
13,121

	For the six months ended December 31,
	2019			2018
OPERATING ACTIVITIES
Net income	$	827		$	639

Adjustments to reconcile net income to cash (used in) provided by operating activities
Depreciation and amortization		107			94
Amortization of cable distribution investments		14			19
Impairment and restructuring charges		9			-
Equity-based compensation		65			-
Other, net		(287	)		200
Deferred income taxes		246			57
Change in operating assets and liabilities, net of acquisitions and dispositions
Receivables and other assets		(640	)		(587	)
Inventories net of program rights payable		(354	)		(168	)
Accounts payable and other liabilities		(243	)		(218	)

Net cash (used in) provided by operating activities		(256	)		36

INVESTING ACTIVITIES
Property, plant and equipment		(110	)		(88	)
Acquisitions, net of cash acquired		(260	)		-
Purchase of investments		-			(100	)
Other investing activities, net		21			(63	)

Net cash used in investing activities		(349	)		(251	)

FINANCING ACTIVITIES
Net transfers to Twenty-First Century Fox, Inc.		-			(312	)
Repurchase of shares		(421	)		-
Dividends paid and distributions		(169	)		(22	)
Other financing activities, net		(48	)		-

Net cash used in financing activities		(638	)		(334	)

Net decrease in cash and cash equivalents		(1,243	)		(549	)
Cash and cash equivalents, beginning of year		3,234			2,500

Cash and cash equivalents, end of period	$	1,991		$	1,951

The accompanying notes are an integral part of these Unaudited Consolidated and Combined Financial Statements.

FOX CORPORATION

UNAUDITED CONSOLIDATED AND COMBINED STATEMENTS OF ~~CASH FLOWS~~EQUITY

(IN MILLIONS)

For the six months ended
December 31,

2018

2017

OPERATING ACTIVITIES

Net income

$
639

$
1,282

Adjustments to reconcile net income to cash provided by (used in) operating activities

Depreciation and amortization

94

83

Amortization of cable distribution investments

19

32

Other, net

200

95

Deferred income taxes

57

(580
)
Change in operating assets and liabilities, net of acquisitions and dispositions

Receivables and other assets

(587
)

(574
)
Inventories net of program rights payable

(168
)

(243
)
Accounts payable and other liabilities

(218
)

(130
)

Net cash provided by (used in) operating activities

36

(35
)

INVESTING ACTIVITIES

Property, plant and equipment

(88
)

(112
)
Proceeds from the relinquishment of spectrum

-

354

Purchase of investments

(100
)

-

Other investing activities, net

(63
)

(3
)

Net cash (used in) provided by investing activities

(251
)

239

FINANCING ACTIVITIES

Net transfers to 21CF

(312
)

(130
)
Distributions and other

(22
)

(37
)

Net cash used in financing activities

(334
)

(167
)

Net (decrease) increase in cash and cash equivalents

(549
)

37

Cash and cash equivalents, beginning of year

2,500

19

Cash and cash equivalents, end of period

$
1,951

$
56

	Class A						Class B					Twenty-First Century			Additional						Accumulated Other				Total Fox Corporation
	Common Stock						Common Stock					Fox, Inc.			Paid-in			Retained			Comprehensive				Stockholders'			Noncontrolling			Total
	Shares			Amount			Shares			Amount		Investment			Capital			Earnings			(Loss) Income				Equity			Interests^(a)			Equity
Balance, September 30, 2019		354		$	4			266		$	3	$	-		$	9,921		$	696		$	(304	)		$	10,320		$	10		$	10,330
Net income		-			-			-			-		-			-			300			-				300			11			311
Other comprehensive income		-			-			-			-		-			-			-			8				8			-			8
Shares repurchased		(8	)		(1	)		(2	)		-		-			(194	)		(232	)		-				(427	)		-			(427	)
Other		1			-			-			-		-			122			11			-				133			(2	)		131
Balance, December 31, 2019		347		$	3			264		$	3	$	-		$	9,849		$	775		$	(296	)		$	10,334		$	19		$	10,353

Balance, September 30, 2018		-		$	-			-		$	-	$	11,106		$	-		$	-		$	(61	)		$	11,045		$	9		$	11,054
Net income		-			-			-			-		8			-			-			-				8			6			14
Other comprehensive income		-			-			-			-		-			-			-			2				2			-			2
Other		-			-			-			-		(19	)		-			-			-				(19	)		(3	)		(22	)
Net decrease in Twenty-First Century Fox, Inc. investment		-			-			-			-		(499	)		-			-			(143	)	^(b)		(642	)		-			(642	)
Balance, December 31, 2018		-		$	-			-		$	-	$	10,596		$	-		$	-		$	(202	)		$	10,394		$	12		$	10,406

Balance, June 30, 2019		354		$	4			266		$	3	$	-		$	9,891		$	357		$	(308	)		$	9,947		$	11		$	9,958
Net income		-			-			-			-		-			-			799			-				799			16			815
Other comprehensive income		-			-			-			-		-			-			-			12				12			-			12
Dividends declared		-			-			-			-		-			-			(143	)		-				(143	)		-			(143	)
Shares repurchased		(8	)		(1	)		(2	)		-		-			(194	)		(232	)		-				(427	)		-			(427	)
Other		1			-			-			-		-			152			(6	)		-				146			(8	)		138
Balance, December 31, 2019		347		$	3			264		$	3	$	-		$	9,849		$	775		$	(296	)		$	10,334		$	19		$	10,353

Balance, June 30, 2018		-		$	-			-		$	-	$	9,513		$	-		$	-		$	81			$	9,594		$	-		$	9,594
Adoption of new accounting standards^(c)		-			-			-			-		143			-			-			(143	)			-			-			-
Net income		-			-			-			-		612			-			-			-				612			6			618
Other comprehensive income		-			-			-			-		-			-			-			3				3			-			3
Other		-			-			-			-		162			-			-			-				162			6			168
Net increase in Twenty-First Century Fox, Inc. investment		-			-			-			-		166			-			-			(143	)	^(b)		23			-			23
Balance, December 31, 2018		-		$	-			-		$	-	$	10,596		$	-		$	-		$	(202	)		$	10,394		$	12		$	10,406

^(a)	Excludes Redeemable noncontrolling interests which are reflected in temporary equity (See Note 4—Fair Value under the heading “Redeemable Noncontrolling Interests”).

^(b)

Represents accumulated other comprehensive loss transferred from Twenty-First Century Fox, Inc. investment related to the pension benefit assets and liabilities of the Shared Plans (See Note 14—Pension and Other Postretirement Benefits in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019 as filed with the Securities and Exchange Commission on August 9, 2019).

⁽^c⁾

Reflects the adoption of ASU 2016-01 and ASU 2018-02 as defined in Note 2—Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019 as filed with the Securities and Exchange Commission on August 9, 2019 under the heading “Recently Adopted and Recently Issued Accounting Guidance and U.S. Tax Reform.”

The accompanying notes are an integral part of these Unaudited Consolidated and Combined Financial Statements.

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Fox Corporation, a Delaware corporation (“FOX” or the “Company”), is a news, sports and entertainment company, which manages and reports its businesses in the following segments: Cable Network Programming, Television and Other, Corporate and Eliminations.

The ~~Proposed~~ Distribution

On ~~June 20, 2018,~~March 19, 2019, the Company became a standalone publicly traded company through the pro rata distribution by Twenty-First Century Fox, Inc. (now known as TFCF Corporation) (“~~Twenty-First Century Fox” or “21CF”~~21CF”)~~, The Walt Disney Company (“Disney”), TWDC Holdco 613 Corp., a wholly-owned subsidiary~~ of Disney (“New Disney”), and certain other subsidiaries of Disney entered into an Amended and Restated Merger Agreement and Plan of Merger, dated June 20, 2018 (the “21CF Disney Merger Agreement”), pursuant to which, among other things, 21CF will merge with and into a subsidiary of New Disney (the “21CF Merger”), Disney will merge with and into a subsidiary of New Disney (the “Disney ~~Merger,”~~ ~~and together with the 21CF~~ ~~Merger,~~ ~~the “mergers”), and each of Disney and 21CF will become wholly-owned subsidiaries of New~~ ~~Disney.~~ ~~A condition to the consummation of the mergers includes the consummation of the Distribution (as defined below).~~

~~In connection with the 21CF Disney Merger Agreement and prior to the Distribution, 21CF and its wholly owned subsidiary, FOX, expect to enter into a separation agreement~~ ~~(the “Separation Agreement”)~~, which will become effective on March 19, 2019. Pursuant to the Separation Agreement, 21CF will, among other things, engage in the separation (the “Separation”), whereby it will transfer to FOX a portfolio of 21CF’s news, sports and broadcast businesses, including ~~FOX News~~, ~~FOX Business, FOX Broadcasting Company (the “FOX Network”),~~ ~~FOX Sports~~, FOX Television Stations Group, and sports cable networks FS1, FS2, FOX Deportes and Big Ten Network (collectively, the “FOX business”), and certain other assets, and FOX will assume from 21CF certain liabilities associated with such businesses and certain other liabilities. 21CF will retain all assets and liabilities not transferred to FOX, including the Twentieth Century Fox film and television studios and certain cable and international television businesses. Following the Separation and prior to the completion of the mergers, 21CF will distribute all of the issued and outstanding common stock of FOX to ~~21CF’s~~21CF stockholders (other than holders that ~~are~~were subsidiaries of 21CF) ~~on a pro rata basis~~ ~~(the~~(the “Distribution”), in accordance with the Amended and Restated Distribution Agreement and Plan of Merger, dated as of June 20, 2018, by and between 21CF and 21CF Distribution Merger Sub, Inc. Following the Distribution, 354 million and 266 million shares of the Company’s Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”), and Class B Common Stock, par value $0.01 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”), respectively, began trading independently on The Nasdaq Global Select Market (“Nasdaq”). In connection with the Distribution, the Company entered into the Separation and Distribution Agreement, dated as of March 19, 2019 (the “Separation Agreement”), with 21CF, which effected the internal restructuring (the “Separation”) whereby 21CF transferred to FOX a portfolio of 21CF’s news, sports and broadcast businesses, including FOX News Media (consisting of FOX News and FOX Business), FOX Entertainment, FOX Sports, FOX Television Stations, and sports cable networks FS1, FS2, FOX Deportes and Big Ten Network, and certain other assets, and FOX assumed from 21CF the liabilities associated with such businesses and certain other liabilities. The Separation and the Distribution ~~are anticipated to be completed on March 19, 2019~~were effected as part of ~~the~~a series of transactions contemplated by the ~~21CF Disney~~Amended and Restated Merger Agreement ~~(collectively, the “Transactions”). Following the completion~~and Plan of ~~the Separation~~Merger, dated as of June 20, 2018, by and ~~Distribution, FOX will become~~among 21CF, The Walt Disney Company (“Disney”) and certain subsidiaries of Disney, pursuant to which, among other things, 21CF became a ~~standalone public company.~~wholly-owned subsidiary of Disney.

Immediately prior to the Distribution, FOX will pay to 21CF a dividend in the amount of $8.5 billion (the “Dividend”), in immediately available funds. FOX has incurred indebtedness (See Note 5 - Borrowings) that will be, together with available cash, sufficient to fund the Dividend, which cash will be replenished and/or indebtedness will be reduced after the mergers by the amount of the Cash Payment (as defined below), if any.

At the open of business on the business day immediately following the date of the Distribution, if the final estimate of the taxes in respect of the Separation and Distribution and divestitures (as well as certain taxes related to the operations of the FOX business from and after January 1, 2018 through the closing of the Transactions) (collectively, the “Transaction Tax”), is lower than $8.5 billion, Disney will make a cash payment to FOX (the “Cash Payment”), which Cash Payment will be the amount obtained by subtracting the final estimate of the Transaction Tax from $8.5 billion, up to a maximum Cash Payment of $2 billion. After the completion of the mergers, FOX will promptly replenish its cash used, and/or reduce the indebtedness incurred, to fund the Dividend by the amount of the Cash Payment, if any.

In connection with the ~~Transactions,~~Separation, the Company ~~expects to enter~~entered into ~~certain other related~~several agreements ~~which~~that govern certain aspects of the Company’s relationship with 21CF and Disney following the ~~Separationand which will become effective on March 19, 2019.~~Separation. These include ~~(i)~~the Separation Agreement, a tax matters agreement, ~~(ii)~~a transition services agreement, as well as agreements relating to intellectual property ~~license agreements, (iii)~~licenses, employee matters, commercial arrangements and a studio lot lease (See Note 1—Description of Business and ~~management agreement, (iv) transition services agreements, (v) commercial agreements and (vi) an employee matters agreement.~~

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS~~

Basis of Presentation in the 2019 Form 10-K, as defined below, for further discussion).

Basis of Presentation

The Unaudited Consolidated and Combined Financial Statements of FOX ~~were~~have been prepared on a standalone basis, derived from the unaudited consolidated financial statements and accounting records of 21CF. These statements reflect the combined historical results of operations, financial position and cash flows of 21CF’s domestic news, national sports and broadcast businesses and certain other assets and liabilities associated with such businesses in accordance with United States (“U.S.”) generally accepted accounting principles (“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 Unaudited Consolidated and Combined Financial Statements. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, ~~2019.~~2020.

These interim Unaudited Consolidated and Combined Financial Statements and notes thereto should be read in conjunction with the audited consolidated and combined financial statements and notes thereto included in the Company’s ~~Registration Statement~~Annual Report on Form ~~10,~~10-K for the fiscal year ended June 30, 2019 as ~~amended and~~ filed with the Securities and Exchange Commission ~~(the “SEC”)~~ on ~~January 7,~~August 9, 2019 (the ~~“Form 10”~~“2019 Form 10-K”).

~~These~~The Company became a separate consolidated group as a result of the Distribution, and the Company’s financial statements for the three and six months ended December 31, 2019 and as of December 31, 2019 and June 30, 2019 are presented ~~as if such businesses had been combined for all periods presented. The assets and liabilities in~~on a consolidated basis. Prior to the Distribution, the Company’s Unaudited Combined Financial Statements ~~have been reflected~~were derived from the unaudited consolidated financial statements and accounting records of 21CF. The Company’s financial statements for the three and six months ended December 31, 2018 are presented on a ~~historical cost~~combined basis as ~~immediately~~the Company was not a separate consolidated group prior to the ~~Distribution all~~Distribution. These financial statements reflect the combined historical results of ~~the~~operations and cash flows of 21CF’s domestic news, national sports and broadcast businesses and certain other assets and liabilities ~~presented are wholly owned by 21CF and are being transferred to the combined~~ associated with such businesses.

FOX ~~group at carry-over basis.~~ CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

The Unaudited Combined Statements of Operations for the three and six months ended December 31, 2018 include allocations for certain support functions that ~~are~~were provided on a centralized basis within 21CF prior to the Distribution and not recorded at the business unit level, such as certain expenses related to finance, legal, insurance, information technology, compliance and human resources management activities, among others. 21CF ~~does~~did not routinely allocate these costs to any of its business units. These expenses have been allocated to FOX on the basis of direct usage when identifiable, with the remainder allocated on a pro rata basis of combined revenues, headcount or other relevant measures. Management believes the assumptions underlying the Unaudited Combined Financial Statements, including the assumptions regarding allocating general corporate expenses from 21CF, are reasonable. Nevertheless, the Unaudited Combined Financial Statements may not include all of the actual expenses that would have been incurred by FOX and may not reflect FOX’s ~~combined~~consolidated results of operations ~~financial position~~ and cash flows had it been a standalone company during the ~~periods~~period presented. Actual costs that would have been incurred if FOX had been a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.

~~The~~For purposes of the Company’s financial statements for the period prior to the Distribution,the income tax ~~(expense) benefit~~provision in the Unaudited Combined Statements of Operations ~~has been~~was calculated as if FOX filed a separate tax return and was operating as a standalone business. Therefore, cash tax payments and items of current and deferred taxes may not be reflective of FOX’s actual tax balances prior to or subsequent to the Distribution. In addition, as a result of the Separation and Distribution, FOX will obtain a tax basis in its assets equal to their respective fair market values, which is expected to result in additional annual tax deductions, principally over the next 15 years.

The Unaudited Combined Financial Statements include certain assets and liabilities that have historically been held at 21CF’s corporate level but are specifically identifiable or otherwise attributablePrior to the ~~Company. All significant intracompany transactions and accounts within~~Distribution, the Company’s ~~combined businesses have been eliminated.~~operating results were included in 21CF’s consolidated U.S. federal and state income tax returns.

Intercompany transactions with 21CF or its affiliates and the Company are reflected in the historical ~~Combined Financial Statements. All significant intercompany balances between 21CF and the Company have been included within the 21CF investment in these~~ Unaudited Combined Financial ~~Statements.~~

~~Any change in~~Statements for the period prior to the Distribution. All significant intracompany transactions and accounts within the Company’s ~~ownership interest~~consolidated and combined businesses have been eliminated. Investments in ~~a combined subsidiary, where~~and advances to entities or joint ventures in which the Company has significant influence, but less than a controlling financial interest, ~~is retained, is~~are accounted for ~~as a capital transaction. When~~using the equity method. Significant influence is generally presumed to exist when the Company ~~ceases to have a controlling~~owns an interest between 20% and 50% and exercises significant influence. In accordance with Accounting Standards Codification (“ASC”) 321 “Investments—Equity Securities” (“ASC 321”), equity securitiesin ~~a combined subsidiary,~~which the Company ~~will recognize~~has no significant influence (generally less than a ~~gain~~20% ownership interest) with readily determinable fair values are accounted for at fair value based on quoted market prices. Equity securities without readily determinable fair values are accounted for either at fair value or ~~loss~~using the measurement alternative which is at cost minus impairment, if any, plus or minus changes resulting from observable price changes in ~~net income upon deconsolidation.~~orderly transactions for the identical or a similar investment of the same issuer. All gains and losses on investments in equity securities are recognized in the Unaudited Consolidated and Combined Statements of Operations.

The preparation of the Company’s Unaudited Consolidated and Combined Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts that are reported in the Unaudited Consolidated and Combined Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates.

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS~~

The Company’s fiscal year ends on June 30 of each year. Certain fiscal ~~2018~~2019 amounts have been reclassified to conform to the fiscal ~~2019~~2020 presentation.

The unaudited and audited consolidated and combined financial statements are referred to as the “Financial Statements” herein. The unaudited consolidated and combined statements of operations are referred to as the “Statements of Operations” herein. The unaudited and audited consolidated balance sheets are referred to as the “Balance Sheets” herein.

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Recently Adopted and Recently Issued Accounting Guidance ~~and U.S. Tax Reform~~

Adopted

In ~~January~~February 2016, the Financial Accounting Standards Board ~~(“FASB”)~~ issued Accounting Standards Update (“ASU”) 2016-01, “Financial Instruments––Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). The amendments in ASU 2016-01 address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The Company adopted this guidance as of July 1, 2018 on a modified retrospective basis and recorded a cumulative effect adjustment to reclassify unrealized holding gains on securities within Accumulated other comprehensive (loss) income to 21CF investment (See Note 6 – Equity). In addition, the Company recorded changes in the fair value of equity investments with readily determinable fair values in Net income rather than in Accumulated other comprehensive (loss) income (See Note 12 – Additional Financial Information under the heading “Other, net”). Cost method investments that do not have readily determinable fair values will be recognized prospectively at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The adjustments related to the observable price changes will also be recognized in net income.

On July 1, 2018, the Company early adopted ASU 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”) on a prospective basis using the security-by-security approach. The objective of ASU 2018-02 is to eliminate the stranded tax effects resulting from the Tax Act (as defined below) and to improve the usefulness of information reported to financial statement users. The adoption of ASU 2018-02 resulted in a reclassification from Accumulated other comprehensive (loss) income to 21CF investment related to the income tax effects on the change in the federal statutory rate (See Note 6 – Equity).

~~Issued~~

~~In February 2016, the FASB issued ASU~~ 2016-02, “Leases (Topic 842)” (“Topic 842”), as amended. Topic 842 requires recognition of lease liabilities and right-of-use (“ROU”) assets on the balance sheet and disclosure of key information about leasing arrangements. ~~Topic 842 will be effective for~~On July 1, 2019, the Company ~~for annual and interim reporting periods beginning July 1, 2019. The Company expects to apply~~adopted Topic 842 on a modified retrospective basis ~~with the cumulative effect, if any,~~and recorded operating lease liabilities and ROU assets of ~~initially applying the new guidance recognized~~approximately $635 million and $585 million, respectively, at the date of adoption as an adjustment to opening retained earnings. The Company is currently evaluating the impact Topic 842 will have on its combined financial statements, including determining which practical expedients to apply. Since the Company has a significant amount of minimum lease commitments (See Note ~~11 – Commitments and Contingencies in~~7—Leases). The difference between the ~~Form 10), the Company expects that the impact~~Company’s initial recognition of ~~recognizing~~ operating lease liabilities and ~~right-of-use~~ROU assets, ~~will be~~at the date of adoption, was primarily a result of the reclassification of the deferred rent liability. The adoption of Topic 842 did not have a significant toimpact on the ~~Company’s Combined Balance Sheet. The Company is in process~~Statements of gathering the necessary lease data and implementing accounting lease software for all leases as well as assessing necessary changes to the Company’s processes and controls to support the recognition and disclosure requirements inOperations. In accordance with the ~~new standard.~~

In March 2019, the FASB issued ASU 2019-02, “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” (“ASU 2019-02”). The amendmentsguidance in ~~ASU 2019-02~~ align the accounting for production costs of episodic television series with the accounting for production costs of films. In addition, ASU 2019-02 modifies certain aspects of the capitalization, impairment, presentation and disclosure requirements in Accounting Standards Codification (“ASC”) 926-20 and the impairment, presentation and disclosure requirements in ASC 920-350. ~~ASU 2019-02 will be~~ ~~effective~~ ~~for~~Topic 842, the Company elected not to reassess (i) whether any existing contracts are or contain leases, (ii) lease classification for annual and interim reporting periods beginning July 1, 2020 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact ASU 2019-02 will have on its combined financial statements.

~~U.S. Tax Reform~~

On December 22, 2017, the U.S. government enacted tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revises the future ongoing U.S. corporate income tax by, among other

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS~~

~~things, lowering U.S. corporate income tax rates and implementing a territorial tax system. Effective July 1, 2018, the Company’s corporate income tax rate is 21%.~~

~~The SEC issued guidance that allowed~~existing leases or (iii) capitalization of initial direct costs for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. As of December 31, 2018, the Company has finalized its analysis and has not materially modified the provisional amounts previously recorded ~~in the combined financial statements (See Note 2 – Summary of Significant Accounting Policies in the Form 10 under the heading “U.S. Tax Reform”).~~existing leases.

NOTE 2. ACQUISITIONS, DISPOSALS AND OTHER TRANSACTIONS

~~Fiscal~~The transactions described below support the Company’s strategy to strengthen its core brands and leverage its sports broadcasting rights and expand their reach beyond their traditional linear businesses.

Acquisitions and Disposals

Television Stations Acquisition and Divestiture

In November 2019, the Company entered into an agreement with Nexstar Media Group, Inc. (“Nexstar”) to acquire 3 television stations (FOX-affiliate KCPQ and MyNetworkTV-affiliate KZJO located in Seattle, Washington and FOX-affiliate WITI located in Milwaukee, Wisconsin) for approximately $350 million. As part of this transaction, the Company has agreed to sell Nexstar 2 television stations located in Charlotte, North Carolina, FOX-affiliate WJZY and MyNetworkTV-affiliate WMYT, for approximately $45 million. The Company and Nexstar have obtained regulatory approvals and completion of the transaction is expected to occur during the third quarter of fiscal 2020, subject to the satisfaction or waiver of other customary closing conditions.

Credible Acquisition

In October 2019, the Company acquired 67% of the equity in Credible Labs Inc. (“Credible”), a U.S. consumer finance marketplace, for approximately A$390 million (approximately $260 million) in cash (the “Credible Acquisition”), net of cash acquired. The remaining 33% of Credible not owned by the Company has been recorded at fair value on the acquisition date based on the Company’s valuation of Credible’s business using a market approach (a Level 3 measurement as defined in Note 4—Fair Value). The consideration transferred of approximately $260 million has been preliminarily allocated, based on a valuation of 100% of Credible, as follows: approximately $70 million to intangible assets with useful lives ranging from five to 10 years; approximately $285 million representing goodwill on the transaction; approximately $(110) million to redeemable noncontrolling interests and the remainder to other net assets. The estimated goodwill, which is not tax deductible, reflects the increased market penetration and synergies expected from combining the operations of Credible and the Company.

In addition, the Company has agreed to contribute up to $75 million of capital to Credible over approximately two years following the closing of the Credible Acquisition.

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Other Transactions

The Stars Group

In May 2019, the Company and The Stars Group Inc. (“The Stars Group”) announced plans to launch FOX Bet, a national media and sports wagering partnership in the U.S., which was launched in the first quarter of fiscal 2020. FOX Sports and The Stars Group have entered into a long-term commercial arrangement through which FOX Sports provides The Stars Group with an exclusive license to use certain FOX Sports trademarks. Prior to the tenth anniversary of the commercial agreement, and subject to certain conditions and applicable gaming regulatory approvals, FOX Sports has an option to acquire up to 50% of the equity inThe Stars Group’s U.S. business. In addition, the Company invested $236 million to acquire a 4.99% equity interest in The Stars Group. The common shares issued to the Company are subject to certain transfer restrictions for a period ending in May 2021, subject to customary exceptions. The Company accounts for the investment in The Stars Group at fair value (See Note 4—Fair Value).

In October 2019, Flutter Entertainment plc (“Flutter”) and The Stars Group announced that they had reached agreement on the terms of a recommended all-share combination to create a global leader in sports betting and gaming (the “Combination”). As part of the agreement, FOX Sports received the right, conditional on the completion of the Combination, to acquire an approximately 18.5% equity interest in FanDuel Group, a majority-owned subsidiary of Flutter, at its market value in 2021 (structured as a 10-year option from 2021, subject to a carrying value adjustment).

Caffeine and Caffeine Studios

In the first quarter of fiscal 2019, the Company invested, in the aggregate, approximately $100 million in cash for a minority equity interest in Caffeine, Inc. (“Caffeine”), a social broadcasting platform for gaming, entertainment and other creative content, and Caffeine Studio, LLC (“Caffeine Studios”), a newly formed venture that is jointly owned by the Company and Caffeine. The Company accounts for the investments in Caffeine ~~at cost plus or minus observable price changes~~ using the measurement alternative in accordance with ASC 321 and Caffeine Studios ~~as an equity method investment.~~

~~Fiscal 2018~~

In March 2017, the Federal Communications Commission (“FCC”) concluded a voluntary auction to reclaim television broadcast station spectrum. The Company had three stations’ bids of $354 million to relinquish spectrum accepted by the FCC as part of the auction and received the proceeds in July 2017. As a result, spectrum previously utilized by its television stations in Washington, DC, Charlotte, NC and Chicago, IL designated market areas, in which the Company operates duopolies, has been relinquished to the FCC. The Company recorded a pre-tax gain of $114 million of which $102 million was recorded in fiscal 2018 and the remaining balance was recorded in Other, net in the Unaudited Combined Statement of Operations for the six months ended December 31, 2018 for the spectrum relinquished to the FCC in July 2018. These television stations will continue broadcasting using the ~~spectrum of the existing FOX Network owned and operated station in that market.~~equity method.

NOTE 3. INVENTORIES, NET

The Company’s inventories were comprised of the following:

	As of December 31, 2018			As of June 30, 2018			As of December 31, 2019			As of June 30, 2019
	(in millions)						(in millions)
Sports programming rights	$	1,179		$	983		$	1,275		$	954
Entertainment programming rights		398			318			467			380

Total inventories, net		1,577			1,301			1,742			1,334
Less: current portion of inventories, net		(1,422	)		(1,180	)		(1,544	)		(1,129	)

Total non-current inventories, net	$	155		$	121		$	198		$	205

NOTE 4. FAIR VALUE

In accordance with ASC 820, “Fair Value Measurement,” fair value measurements are required to be disclosed using a three-tiered fair value hierarchy which distinguishes market participant assumptions into the following categories: (i) inputs that are quoted prices in active markets (“Level 1”); (ii) inputs other than quoted prices included within Level 1 that are observable, including quoted prices for similar assets or liabilities (“Level 2”); and (iii) inputs that require the entity to use its own assumptions about market participant assumptions (“Level 3”).

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

The following tables present information about financial assets and liabilities carried at fair value on a recurring ~~basis. As of December 31, 2018 and June 30, 2018, there were no assets or liabilities in the Level 2 category.~~basis:

	Fair value measurements								Fair value measurements
	As of December 31, 2018								As of December 31, 2019
	Total			Level 1		Level 3			Total			Level 1		Level 2		Level 3
	(in millions)								(in millions)
Assets
Investments^(a)	$	185		$	185	$	-
Investments in equity securities^(a)									$	1,132		$	806	$	326	$	-
Other										3			3		-		-
Liabilities
Other^(b)										(6	)		-		-		(6	)
Redeemable noncontrolling interests^(b)		(106	)		-		(106	)		(216	)		-		-		(216	)

Total	$	79		$	185	$	(106	)	$	913		$	809	$	326	$	(222	)

									Fair value measurements
	As of June 30, 2018								As of June 30, 2019
	Total			Level 1		Level 3			Total			Level 1		Level 2		Level 3
	(in millions)								(in millions)
Assets
Investments^(a)	$	257		$	257	$	-
Investments in equity securities^(a)									$	761		$	545	$	216	$	-
Redeemable noncontrolling interests^(b)		(275	)		-		(275	)		(189	)		-		-		(189	)

Total	$	(18	)	$	257	$	(275	)	$	572		$	545	$	216	$	(189	)

^(a)

~~Represents~~The investment categorized as Level 1 represents an investment in equity securities of Roku, Inc. ~~(“Roku”)~~ with a readily determinable fair value. The investment categorized as Level 2 represents an investment in equity securities of The Stars Group estimated using the quoted market price of The Stars Group common stock less a discount due to a lack of marketability (“DLOM”). The DLOM was derived based on the remaining term of the lock up period and the volatility of The Stars Group common stock (See Note 2—Acquisitions, Disposals and Other Transactions under the heading “The Stars Group” for further discussion).

^(b)(^b⁾

The Company utilizes the market approach valuation technique for its Level 3 fair value measures. Inputs to such measures could include observable market data obtained from independent sources such as broker quotes and recent market transactions for similar assets. It is the Company’s policy to maximize the use of observable inputs in the measurement of its Level 3 fair value measurements. To the extent observable inputs are not available, the Company utilizes unobservable inputs based upon the assumptions market participants would use in valuing the liability. Examples of utilized unobservable inputs are future cash flows and ~~long term~~long-term growth rates.

Redeemable Noncontrolling Interests

The Company accounts for redeemable noncontrolling interests in accordance with ASC 480-10-S99-3A, “Distinguishing Liabilities from ~~Equity” (“ASC 480-10-S99-3A”),~~Equity,” because their exercise is outside the control of the Company. The redeemable noncontrolling interests recorded at fair value are put ~~arrangements~~rights held by ~~the noncontrolling interests~~minority shareholders in ~~one of the Company’s~~ a majority-owned sports ~~networks.~~network and Credible.

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

The changes in redeemable noncontrolling interests classified as Level 3 measurements were as follows:

	For the three months ended December 31,						For the six months ended December 31,							For the three months ended December 31,							For the six months ended December 31,
	2018			2017			2018				2017			2019				2018			2019				2018
	(in millions)													(in millions)
Beginning of period	$	(83	)	$	(172	)	$	(275	)		$	(154	)	$	(207	)		$	(83	)	$	(189	)		$	(275	)
Acquisitions^(a)															(109	)			-			(109	)			-
Net income		(10	)		(13	)		(21	)			(23	)		(3	)			(10	)		(12	)			(21	)
Distributions		6			9			19				19			5				6			13				19
Accretion and other		(19	)		(19	)		171		^(a)		(37	)		98		^(b)		(19	)		81		^(b)		171		^(c)
					-														-
End of period	$	(106	)	$	(195	)	$	(106	)		$	(195	)	$	(216	)		$	(106	)	$	(216	)		$	(106	)

^(a)	See Note 2—Acquisitions, Disposals and Other Transactions under the heading “Credible Acquisition.”

⁽^b⁾	As a result of the expiration of a portion of the put rights held by the sports network minority ~~shareholder’s~~shareholder during the three months ended December 31, 2019, approximately $120 million was reclassified into equity.

⁽^c⁾	As a result of the expiration of a portion of the put ~~right,~~rights held by the sports network minority shareholder during the six months ended December 31, 2018, approximately $200 million was reclassified into ~~21CF investment.~~equity.

~~As of December 31, 2018, the redeemable noncontrolling interests are not exercisable. A~~Another portion of the put rights held by the sports network minority ~~shareholder’s put right~~shareholder will become exercisable in July ~~2019.~~2020 and the remaining portion will become exercisable in July 2021. The put right held by the Credible minority shareholder will become exercisable in fiscal year 2025.

~~FOX CORPORATION~~Financial Instruments

~~NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS~~The carrying value of the Company’s financial instruments, such as cash and cash equivalents, receivables, payables and investments accounted for using the measurement alternative in accordance with ASC 321, approximates fair value.

	As of December 31, 2019		As of June 30, 2019
	(in millions)
Borrowings

Fair value	$	7,879	$	7,643

Carrying value	$	6,753	$	6,751

Fair value is generally determined by reference to market values resulting from trading on a national securities exchange or in an over-the-counter market (a Level 1 measurement).

Concentrations of Credit Risk

Cash and cash equivalents are maintained with several financial institutions. The Company has deposits held with banks that exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and, therefore, bear minimal credit risk.

Generally, the Company does not require collateral to secure receivables. As of December 31, ~~2018,~~2019 and June 30, 2019, the Company had no0 individual customers that accounted for 10% or more of the Company’s receivables. ~~As of June 30, 2018,~~

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

NOTE 5. GOODWILL AND INTANGIBLE ASSETS, NET

The changes in the ~~Company had two customers that accounted for approximately 21%~~carrying values of the Company’s ~~receivables.~~intangible assets and related accumulated amortization were as follows:

	Intangible assets not subject to amortization
	FCC licenses		Other		Total		Amortizable intangible assets, net^(a)			Total intangible assets, net
	(in millions)
Balance, June 30, 2019	$	2,167	$	642	$	2,809	$	42		$	2,851
Amortization		-		-		-		(13	)		(13	)
Acquisitions^(b)		-		-		-		73			73

Balance, December 31, 2019	$	2,167	$	642	$	2,809	$	102		$	2,911

^(a)	Net of accumulated amortization of $142 million and $129 million as of December 31, 2019 and June 30, 2019, respectively. The average useful life of amortizable intangible assets ranges from five to 20 years.

⁽^b⁾	See Note 2—Acquisitions, Disposals and Other Transactions under the heading “Credible Acquisition.”

The changes in the carrying value of goodwill, by segment, are as follows:

	Cable Network Programming		Television		Other, Corporate and Eliminations		Total Goodwill
	(in millions)
Balance, June 30, 2019	$	987	$	1,704	$	-	$	2,691
Acquisitions^(a)		42		36		222		300
Balance, December 31, 2019	$	1,029	$	1,740	$	222	$	2,991

⁽^a⁾	Primarily relates to the Credible Acquisition (See Note 2—Acquisitions, Disposals and Other Transactions under the heading “Credible Acquisition”).

NOTE 5.6. BORROWINGS

InBorrowings include senior notes (See Note 9—Borrowings in the 2019 Form 10-K under the heading “Senior Notes Issued Under the January 2019 Indenture”). In addition, the Company issued $750 million of 3.666% Senior Notes due 2022, $1.25 billion of 4.030% Senior Notes due 2024, $2.00 billion of 4.709% Senior Notes due 2029, $1.25 billion of 5.476% Senior Notes due 2039 and $1.55 billion of 5.576% Senior Notes due 2049 (the “Notes Offering”). The Company intendsis party to use the net proceeds of approximately $6.8 billion from the sale of the notes, together with available cash on its balance sheet and, if needed, borrowings under the Revolving Credit Agreement and/or the Bridge Credit Agreement (each as defined below) to fund the Dividend and to pay fees and expenses incurred in connection with the Notes Offering and the Transactions.

~~Revolving Credit Agreement~~

~~On March 15, 2019, the Company entered into~~ a credit agreement (the “Revolving Credit Agreement”) among the Company as Borrower, the initial lenders named therein, the initial issuing banks named therein, Citibank, N.A., as Administrative Agent, Deutsche Bank Securities Inc. and Goldman Sachs Bank USA, as Co-Syndication Agents, JPMorgan Chase Bank, N.A. and Morgan Stanley Bank, N.A., as Co-Documentation Agents and the other parties party thereto. ~~The Revolving Credit Agreement provides for~~providing a $1.0 billion unsecured revolving credit facility with a sub-limit of $150 million available for the issuance of letters of credit and a maturity date of March ~~2024. Under the Revolving Credit Agreement, the Company may request an increase~~2024 (See Note 9—Borrowings in the amount of the credit facility commitments up to a maximum facility amount of $1.5 billion and the Company may request that the maturity date be extended for up to two additional one-year periods. The material terms of the Revolving Credit Agreement include the requirement that the Company maintain specific leverage ratios and limitations on indebtedness. The interest rates and fees2019 Form 10-K under the ~~Revolving~~heading “Revolving Credit Agreement are based on the Company’s long-term senior unsecured non-credit enhanced debt ratings. Given the current credit ratings, the interest rate on borrowings under the Revolving Credit Agreement would be London Interbank Offered Rate (“LIBOR”Agreement”) ~~plus 1.1% and the facility fee is 0.15%~~. As of ~~March 18,~~December 31, 2019, there were no0 borrowings outstanding under the ~~Revolving Credit Agreement.~~revolving credit agreement.

~~Bridge Credit Agreement~~NOTE7. LEASES

~~In addition, as previously disclosed, 21st Century Fox America, Inc.,~~Lessee Arrangements

The Company has lease agreements primarily for office facilities, transponder agreements and other equipment leases. At contract inception, the Company determines if a ~~wholly owned subsidiary~~contract is or contains a lease and whether it is an operating or finance lease. The Company does not separate lease components from nonlease components for real estate leases.

For operating leases that have a lease term of ~~21CF, entered into a commitment letter on behalf of FOX with~~greater than one year, the ~~financial institutions party thereto~~Company initially recognizes operating lease liabilities and ROU assets at the lease commencement date, which is the date that the lessor makes an underlying asset available for use by the Company. ROU assets represent the Company’s right to ~~provide FOX with financing in connection with~~use an underlying asset for the ~~Dividend. On March 15, 2019, in anticipation~~lease term and lease liabilities represent the present value of the ~~payment~~Company’s obligation to make lease payments, primarily escalating fixed payments, over the lease term. The discount rate used to determine the present value of the ~~Dividend,~~lease payments is generally the Company’s incremental borrowing rate because the rate implicit in the lease is generally not readily determinable. The incremental borrowing rate for the lease term is determined by adjusting the Company’s unsecured borrowing rate for a similar term to approximate a collateralized borrowing rate. The Company's lease terms for each of its leases represents the noncancelable period for which the Company ~~entered into a $1.7 billion 364-Day Bridge Term Loan Agreement (the “Bridge Credit Agreement”) with~~has the initial lenders named therein, Goldman Sachs Bank USA, as Administrative Agent, Sole Lead Arranger and Sole Bookrunner, and Citibank, N.A. and Deutsche Bank Securities Inc., as Co-Syndication Agents. The material terms of the Bridge Credit Agreement include the requirement that the Company maintain specific leverage ratios and limitations on indebtedness. The interest rates and commitment fee under the Bridge Credit Agreement are based on the Company’s long-term senior unsecured non-credit enhanced debt ratings. Given the Company’s current debt ratings, the initial interest rate on advances will be LIBOR plus 1.25% and will subsequently increase every 90 days upright to ~~LIBOR plus 2.00%, and the commitment fee on undrawn funds is 0.125%. The Company will also pay a duration fee on each of the 90th, 180th and 270th day after the funding of the loans in~~use an amount equal to 0.50%, 0.75%, and 1.00%, respectively, of the aggregate amount of the advances outstanding at the time. As of March 18, 2019, no loans have been funded under the Bridge Credit Agreement.underlying asset,

1012

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

~~NOTE 6. EQUITY~~together with all of the following: (i) periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; (ii) periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option; and (iii) periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor. The Company recognizes lease payments as lease expense on a straight-line basis over the lease term.

The Company’s operating ROU assets are included in Other non-current assets and the Company’s current and non-current operating lease liabilities are included in Accounts payable, accrued expenses and other current liabilities and Other liabilities, respectively, in the Company’s Balance Sheet (See Note 14—Additional Financial Information).

The following ~~tables summarize changes~~amounts were recorded in ~~equity:~~the Company’s Balance Sheet relating to its operating leases and other supplemental information:

For the three months ended December 31, 2018

For the six months ended December 31, 2018

Total FOX equity

Noncontrolling interests^(a)

Total equity

Total FOX equity

Noncontrolling interests^(a)

Total equity

(in millions)

Balance, beginning of period

$
11,045

$
9

$
11,054

$
9,594

$
-

$
9,594

Net income

8

6

14

612

6

618

Other comprehensive income

2

-

2

3

-

3

Other

(19
)

(3
)

(22
)

162

⁽^b⁾

6

168

Net (decrease) increase in 21CF investment

(642
)
^(c)

-

(642
)

23

^(c)

-

23

-

Balance, end of period

$
10,394

$
12

$
10,406

$
10,394

$
12

$
10,406

	As of December 31, 2019
	(in millions)
ROU assets	$	533
Lease liabilities
Current lease liabilities	$	142
Non-current lease liabilities		429

Total lease liabilities	$	571
Other supplemental information
Weighted average remaining lease term	7 years
Weighted average discount rate		3	%

The following table presents information about the Company’s lease costs and supplemental cash flows information for leases:

For the three months ended December 31, 2017

For the six months ended December 31, 2017

Total FOX equity

Noncontrolling interests^(a)

Total equity

Total FOX equity

Noncontrolling interests^(a)

Total equity

(in millions)

Balance, beginning of period

$
6,533

$
-

$
6,533

$
6,093

$
-

$
6,093

Net income

869

-

869

1,259

-

1,259

Other comprehensive income

98

-

98

180

-

180

Other

(19
)

-

(19
)

(37
)

-

(37
)
Net increase in 21CF investment

472

-

472

458

-

458

-

Balance, end of period

$
7,953

$
-

$
7,953

$
7,953

$
-

$
7,953

	For the three months ended December 31, 2019		For the six months ended December 31, 2019
	(in millions)
Lease costs
Total lease costs^(a)	$	31	$	61
Supplemental cash flows information
Operating cash flows from operating leases	$	43	$	81

^(a)

~~Excludes Redeemable noncontrolling interests which~~Total lease costs of $31 million and $61 million for the three and six months ended December 31, 2019, respectively, are ~~reflected in temporary equity (See Note 4 - Fair Value under the heading “Redeemable Noncontrolling Interests”).~~net of sublease income of approximately $15 million and $25 million, respectively.

⁽^b⁾	~~Approximately $200 million was reclassified to 21CF investment from Redeemable noncontrolling interests (See Note 4 - Fair Value).~~

⁽^c⁾	~~Includes accumulated other comprehensive loss of $143 million transferred from 21CF investment (See Note 10 - Pension and Other Postretirement Benefits).~~

~~Comprehensive Income~~

Comprehensive income is reported in the Unaudited Combined Statements of Comprehensive Income and consists of Net income and Other comprehensive income (loss), including unrealized holding gains and losses on securities and benefit plan adjustments, which affect Total equity, and under GAAP, are excluded from Net income.

The following table ~~summarizes~~presents the ~~material activity within Other comprehensive income:~~lease payments relating to the Company’s operating leases:

For the three months ended
December 31, 2017

For the six months ended
December 31, 2017

Before tax

Tax
provision

Net of tax

Before tax

Tax
provision

Net of tax

(in millions)

Gains on securities

Unrealized gains

$
154

$
(58
)

$
96

$
283

$
(106
)

$
177

Other comprehensive income

$
154

$
(58
)

$
96

$
283

$
(106
)

$
177

	As of December 31, 2019
	(in millions)
Fiscal Year
2020	$	80
2021		126
2022		91
2023		86
2024		82
Thereafter		194

Total lease payments^(a)		659
Less: imputed interest		(88	)

Present value of operating lease liabilities	$	571

^(a)	In addition to the total lease payments presented above, the Company has a lease for an office facility with total lease payments of approximately $55 million that has not yet commenced as of December 31, 2019.

1113

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

~~Accumulated other comprehensive (loss)~~Lessor Arrangements

The Company’s lessor arrangements primarily relate to its owned production and office facilities at the FOX Studios lot, which is located in Los Angeles, California. The Company is responsible for the management of the FOX Studios lot, which includes managing and providing facilities, studio operations, and production services, which until 2026 will predominantly be utilized by Disney productions. The Company leases production and office space on the FOX Studios lot to 21CF for an initial term of seven years, subject to 2 five-year renewal options exercisable by 21CF. The Company will receive approximately $50 million annually in lease payments over the lease term.

The Company recorded total lease income of approximately $10 million and $25 million for the three and six months ended December 31, 2019, respectively, which is included in Revenues in the Statements of Operations. The Company recognizes lease payments for operating leases as revenue on a straight-line basis over the lease term and variable lease payments as revenue in the period incurred.

NOTE 8. STOCKHOLDERS’ EQUITY

Stock Repurchase Program

On November 6, 2019, the Company announced that its Board of Directors (the “Board”) had authorized a stock repurchase program providing for the repurchase of $2 billion of the Company’s Common Stock. The program has no time limit and may be modified, suspended or discontinued at any time. The Company also announced that it had entered into an accelerated share repurchase (“ASR”) agreement to repurchase $350 million of Class A Common Stock and announced its intention to promptly repurchase $150 million of Class B Common Stock.

In accordance with the ASR agreement in November 2019, the Company paid a third-party financial institution $350 million and received an initial delivery of approximately 8 million shares of Class A Common Stock, representing 80% of the shares expected to be repurchased under the ASR agreement, at a price of $34.99 per share, which was the Nasdaq closing share price of the Class A Common Stock on November 11, 2019. Upon settlement of the ASR agreement in January 2020, the Company received a final delivery of approximately 2 million shares of Class A Common Stock. The final number of shares purchased under the ASR agreement was determined using a price of $36.05 per share (the volume-weighted average market price of the Class A Common Stock during the term of the ASR agreement less a discount). The Company accounted for the ASR agreement as two separate transactions. The initial delivery of Class A Common Stock was accounted for as a treasury stock transaction recorded on the acquisition date. The final settlement of Class A Common Stock was accounted for as a forward contract indexed to the Class A Common Stock and qualified as an equity transaction.

In addition, the Company repurchased approximately 2 million shares of Class B Common Stock for $77 million during the three months ended December 31, 2019. Subsequent to December 31, 2019, the Company repurchased $73 million of Class B Common Stock to achieve the intended repurchase of $150 million of Class B Common Stock announced on November 6, 2019.

Repurchased shares are retired and reduce the number of shares issued and outstanding. The Company allocates the amount of the repurchase price over par value between additional paid-in capital and retained earnings.

As of December 31, 2019, the Company’s remaining stock repurchase authorization was approximately $1.6 billion.

Stockholders Agreement

The Company also announced on November 6, 2019 that it had entered into a stockholders agreement with the Murdoch Family Trust pursuant to which the Company and the Murdoch Family Trust have agreed not to take actions that would result in the Murdoch Family Trust and Murdoch family members together owning more than 44% of the outstanding voting power of the shares of Class B Common Stock or would increase the Murdoch Family Trust’s voting power by more than 1.75% in any rolling twelve-month period. The Murdoch Family Trust would forfeit votes to the extent necessary to ensure that the Murdoch Family Trust and the Murdoch family collectively do not exceed 44% of the outstanding voting power of the Class B shares, except where a Murdoch family member votes their own shares differently from the Murdoch Family Trust on any matter.

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Temporary Stockholder Rights Plan

In connection with the Distribution, the Board approved the adoption of a Temporary Stockholder Rights Agreement (as amended, the “Rights Agreement”), effective March 19, 2019 (See Note 10—Stockholders’ Equity in the 2019 Form 10-K under the heading “Temporary Stockholder Rights Plan”). In November 2019, the rights issued pursuant to the Rights Agreement expired in accordance with the terms of the agreement.

Dividends

The following table summarizes the ~~changes in~~dividends declared per share on both the ~~components of Accumulated other comprehensive (loss) income, net of tax:~~Company’s Class A Common Stock and Class B Common Stock:

For the three months ended December 31, 2018

For the six months ended December 31, 2018

Unrealized holding gains on securities

Benefit plan adjustments and other

Accumulated other comprehensive (loss) income

Unrealized holding gains on securities

Benefit plan adjustments and other

Accumulated other comprehensive (loss) income

(in millions)

Balance, beginning of period

$
-

$
(61
)
$
(61
)
$
130

$
(49
)
$
81

Adoption of ASUs

-

-

-

(130
)
^(a)

(13
)
^(b)

(143
)
Other comprehensive income, net of tax

-

2

2

-

3

3

Transferred from 21CF investment

-

(143
)
^(c)

(143
)

-

(143
)
^(c)

(143
)

Balance, end of period

$
-

$
(202
)
$
(202
)
$
-

$
(202
)
$
(202
)

	For the three months ended December 31,				For the six months ended December 31,
	2019		2018		2019		2018
Cash dividend per share	$	-	$	-	$	0.23	$	-

^(a)

Subsequent to December 31, 2019, the Company declared a semi-annual dividend of $0.23 per share on both the Class A Common Stock and the Class B Common Stock. The dividend declared is payable on April 1, 2020 with a record date for determining dividend entitlements of March 4, 2020.

Reflects the adoption of ASU 2016-01 (See Note 1 - Description of Business and Basis of Presentation under the heading “Recently Adopted and Recently Issued Accounting Guidance and U.S. Tax Reform” for additional information).

^(b)	Reflects the adoption of ASU 2018-02 (See Note 1 - Description of Business and Basis of Presentation under the heading “Recently Adopted and Recently Issued Accounting Guidance and U.S. Tax Reform” for additional information).

⁽^c⁾	~~See Note 10 - Pension and Other Postretirement Benefits.~~

NOTE 7.9. EQUITY-BASED COMPENSATION

~~Until the completion of~~In connection with the Distribution, the Company’s employees participate in 21CF’s equity plans. 21CF has plans authorized to grant equity awards of 21CF stock to the Company’s employees. The equity-based compensation expense recorded by the Company in the periods presented, includes the expense associated with the employees historically attributable to the Company’s operations, as well as the expense associated with the allocation of equity-based compensation expense for corporate employees.

~~The Company will have a new equity compensation plan relating to equity awards of FOX stock,~~adopted the Fox Corporation 2019 Shareholder Alignment Plan (the “SAP”), ~~that will become effective in connection with the Distribution. Equity-based~~under which equity-based compensation, including stock options, stock appreciation rights, restricted and unrestricted stock, restricted stock units (“RSUs”), performance stock units (“PSUs”) and other types of FOX equity awards may be granted. The Company’s officers, directors and employees ~~will be~~are eligible to participate in the SAP.

~~In connection with~~Performance Stock Units

PSUs are fair valued on the ~~Distribution, 21CF~~date of grant and expensed over the service period using a straight-line method as the awards cliff vest at the end of the three-year performance ~~stock units (“PSUs”) scheduled~~period. The Company also estimates the number of shares expected to vest which is based on management’s determination of the probable outcome of the performance conditions, which requires considerable judgment. The Company records a cumulative adjustment in ~~2019 and 50%~~periods that the Company’s estimate of ~~21CF retention RSUs were accelerated and paid out in~~the number of shares ~~of 21CF class A common stock in March 2019. 21CF RSUs and PSUs scheduled~~expected to vest ~~after 2019~~changes. Additionally, the Company ultimately adjusts the expense recognized to reflect the actual vested shares following the resolution of the performance conditions. The number of shares that will be ~~converted into new equity awards~~issued upon vesting of PSUs can range from 0% to 200% of the ~~Company, using a formula designed to preserve~~target award, based on (i) the Company’s average annual adjusted earnings per share growth, (ii) the Company’s average annual adjusted free cash flow growth and (iii) the Company’s three-year total shareholder return (“TSR”) as measured against the three-year TSR of the companies that comprise the Standard and Poor’s 500 Index. The fair value of the TSR condition is determined using a Monte Carlo simulation model.

During the six months ended December 31, 2019, approximately 1.4 million PSUs were granted, which have a three-year performance measurement period beginning in July 2019. The awards ~~immediately prior~~are subject to the Distribution. Converted awards will have the same terms and features as the original 21CF awards, except for the PSUs, which will be converted into RSUs that will be subject only to time-based vesting conditions and will no longer be subject to achievement of ~~applicable~~three pre-established objective performance ~~goals. In addition,~~measures determined by the remaining 50% of the 21CF retention RSUs will be converted into new FOX equity awards and Disney equity awards on the same pro rata basis accorded to shareholders of 21CF common stock in the mergers. All of the converted FOX equity awards will be made under the SAP.

~~The~~ Compensation Committee of the ~~Board~~Board. The awards issued will be settled in shares of ~~Directors of FOX will consider making initial grants under~~Class A Common Stock upon vesting and are subject to the ~~SAP in connection~~participants’ continued employment with the ~~Distribution. These shareholder alignment grants would likely consist~~Company. Any person who holds PSUs shall have no ownership interest in the shares of Class A Common Stock to which such PSUs relate until and unless shares of Class A Common Stock are delivered to the holder. All shares of Class A Common Stock awards that are cancelled or forfeited become available for future grants. Certain of these awards have a ~~mix of stock options~~graded vesting provision and ~~RSUs.~~the expense recognition is accelerated.

12Restricted Stock Units

During the six months ended December 31, 2019, approximately 1.1 million RSUs were granted, which vest in equal annual installments over a three-year period subject to the participants’ continued employment with the Company.

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Stock Options

During the six months ended December 31, 2019, approximately 3.8 million stock options were granted, which generally have a term of seven years and vest in equal annual installments over a three-year period subject to the participants’ continued employment with the Company. As of December 31, 2019, the Company had approximately 7 million stock options outstanding. For the three and six months ended December 31, 2019, the computation of diluted earnings per share did not include most of the stock options outstanding during these periods, because their inclusion would have been antidilutive.

The following table summarizes the Company’s equity-based compensation:

	For the three months ended December 31,				For the six months ended December 31,				For the three months ended December 31,				For the six months ended December 31,
	2018		2017		2018		2017		2019		2018		2019		2018
	(in millions)								(in millions)
Equity-based compensation^(a)	$	12	$	15	$	33	$	28	$	42	$	12	$	74	$	33

Intrinsic value of all settled equity-based awards	$	8	$	-	$	110	$	31	$	3	$	8	$	6	$	110

^(a)	~~Includes~~Prior to the Distribution, equity-based compensation included allocated expense for both executive directors and corporate executives of 21CF, allocated using a proportional allocation driver, which management ~~has~~ deemed to be reasonable.

The Company’s stock based awards are settled in Class A Common Stock. As of December 31, ~~2018,~~2019, the Company’s total estimated compensation cost, not yet recognized, related to non-vested equity awards held by the Company’s employees ~~for all plans presented~~ was approximately ~~$115~~$205 million and is expected to be recognized over a weighted average period between one and two years.

NOTE 8.10. RELATED PARTY TRANSACTIONS AND ~~21CF~~TWENTY-FIRST CENTURY FOX, INC. INVESTMENT

Related Party Transactions

In the ordinary course of business, the Company enters into transactions with related parties, ~~including~~which prior to the Distribution included subsidiaries and equity affiliates of ~~21CF, to buy and/or sell programming and purchase and/or sell advertising.~~ 21CF.

The following table sets forth the net revenue from related parties included in the ~~Combined~~ Statements of ~~Operations:~~Operations for the three and six months ended December 31, 2018:

	For the three months ended December 31,						For the six months ended December 31,
	2018			2017			2018			2017			For the three months ended December 31, 2018			For the six months ended December 31, 2018
	(in millions)												(in millions)
Related party revenue	$	107		$	68		$	178		$	132		$	107		$	178
Related party expense		(3	)		(7	)		(34	)		(49	)		(3	)		(34	)

Related party revenue, net of expense	$	104		$	61		$	144		$	83		$	104		$	144

For the three and six months ended December 31, 2019, the related party revenue and expense were not material.

Corporate Allocations and ~~21CF~~Twenty-First Century Fox, Inc. Investment

~~Historically,~~Prior to the Distribution, 21CF ~~has~~ provided services to and funded certain expenses for the Company such as: global real estate and occupancy costs and employee benefits (“Direct Corporate Expenses”). In addition, the Company’s Unaudited Combined Financial Statements include general corporate expenses of 21CF which were not historically allocated to the Company for certain support functions that ~~are~~were provided on a centralized basis within 21CF and not recorded at the business unit level, such as certain expenses related to finance, legal, insurance, information technology, compliance and human resources management activities, among others (“General Corporate Expenses”). For purposes of ~~these standalone~~the Unaudited Combined Financial Statements for the three and six months ended December 31, 2018, the General Corporate Expenses have been allocated to the Company. The General Corporate Expenses are included in the Unaudited Combined Statements of Operations in Selling, general and administrative expenses and Other, net, as ~~appropriate, and accordingly as a component of the 21CF investment in the Combined Balance Sheets.~~appropriate. These expenses have been allocated to the Company on the basis of direct usage when identifiable, with the

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

remainder allocated on a pro rata basis of combined revenues, headcount or other relevant measures of the Company. Management believes the assumptions underlying the Unaudited Combined Financial Statements, including the assumptions regarding allocating General Corporate Expenses from 21CF are reasonable. Nevertheless, the Unaudited Combined Financial Statements may not include all of the actual expenses that would have been incurred by FOX and may not reflect the Company’s ~~combined~~consolidated results of operations ~~financial position~~ and cash flows had it been a standalone company ~~during~~prior to the ~~periods presented.~~Distribution. Actual costs that would have been incurred if the Company had been a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. For the purposes of ~~these standalone~~the Unaudited Combined ~~Financial~~ Statements of Operations, the ~~corporate allocations~~Company recorded approximately $95 million and $170 million of General Corporate Expenses within Selling, general and administrative expenses for the three ~~months ended December 31, 2018~~ and ~~2017 of $95 million and $83 million, respectively, and for the~~ six months ended December 31, 2018, respectively, and ~~2017~~the remaining balance of ~~$180 million~~the Corporate allocations presented in the table below within Other, net for the three and ~~$137 million, respectively, were General Corporate Expenses of 21CF which were not historically allocated to the Company.~~six months ended December 31, 2018.

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS~~

Intercompany transactions with 21CF or its affiliates and the Company are reflected in the historical Unaudited Combined Financial ~~Statements.~~Statements for the period prior to the Distribution. All significant intercompany balances between 21CF and the Company ~~are~~for the period prior to the Distribution have been reflected in the Unaudited Combined ~~Statements~~Statement of Cash Flows as a financing ~~activity and in the Combined Balance Sheets as a 21CF investment.~~activity.

The following table summarizes the components of the net (decrease) increase in the ~~21CF~~ Twenty-First Century Fox, Inc. investment for the three and six months ended December 31, ~~2018 and 2017:~~2018:

For the three months ended December 31,

For the six months ended December 31,

2018

2017

2018

2017

(in millions)

Cash pooling and general financing activities^(a)

$
(594
)

$
389

$
(14
)

$
321

Corporate allocations

95

83

180

137

Net (decrease) increase in 21CF investment

$
(499
)

$
472

$
166

$
458

	For the three months ended December 31, 2018			For the six months ended December 31, 2018
	(in millions)
Cash pooling, general financing activities and other^(a)	$	(594	)	$	(14	)
Corporate allocations		95			180

Net (decrease) increase in Twenty-First Century Fox, Inc. investment	$	(499	)	$	166

^(a)

The nature of activities included in the line item ‘Cash pooling, ~~and~~ general financing ~~activities’~~activities and other’ includes financing activities, capital transfers, cash sweeps, other treasury services and Direct Corporate Expenses. As part of this activity and prior to December 31, 2017, the majority of the cash balances are swept to 21CF on a daily basis and the Company receives capital from 21CF for the Company’s cash needs. Effective January 1, 2018, the Company ceased participating in 21CF’s capital and cash management accounts.

NOTE 9.11. 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. The total firm commitments and future debt payments as of December 31, ~~2018~~2019 and June 30, ~~2018~~2019 were approximately ~~$34~~$37 billion and ~~$32~~$41 billion, respectively. The ~~increase~~decrease from June 30, ~~2018~~2019 was primarily due to the new multi-year, multi-platform rights agreement expanding the Company’s television, digital and Spanish-language rights and extending its arrangement with Major League Baseball (“MLB”) through the 2028 MLB season partially offset by sports programming rights payments.

~~In January 2019,~~The commitments above do not include obligations and commitments related to the ~~Company issued approximately $6.8 billion of senior notes (See~~pending transaction disclosed in Note ~~5 - Borrowings).~~2—Acquisitions, Disposals and Other Transactions.

Contingencies

Profits Participants Litigation

OnIn November ~~25,~~ 2015, Wark Entertainment, Inc. filed a lawsuit (the “Wark Lawsuit”) against Twentieth Century Fox Film Corporation, the FOX Network, and Fox Entertainment Group, Inc. (“Fox Entertainment Group”) in the Superior Court of the State of California, County of Los Angeles, Central District (the “Los Angeles Superior Court”). On November 30, 2015,, Temperance Brennan, L.P., Snooker Doodle Productions, Inc., and Bertha Blue, Inc. filed ~~a lawsuit (the “Temperance Brennan Lawsuit”)~~lawsuits against 21CF, Fox Entertainment Group, Twentieth Century Fox Film Corporation, Twentieth Century Fox Television (“TCFTV”), and ~~the FOX Network~~Fox Broadcasting Corporation in the Superior Court of Los ~~Angeles Superior Court.~~Angeles. The plaintiffs ~~in these cases~~ are profits participants in the Bonestelevision series ~~Bones~~,and alleged that TCFTV, which ~~was~~ produced ~~by Twentieth Century Fox Television, a unit of Twentieth Century Fox Film Corporation (“TCFTV”), and aired on~~ the FOX Network from 2005 to 2017. TCFTV, 21CF, the FOX Network and Fox Entertainment Group are defendants in one or both of the Wark Lawsuit and the Temperance Brennan Lawsuit (collectively, the “Lawsuits”), which were joined by the Los Angeles Superior Court on December 21, 2015.

~~The plaintiffs in the Lawsuits alleged, among other things, that TCFTV~~show, breached its contracts with the plaintiffs and committed fraud concerning certain of those contracts, and that 21CF, Fox Entertainment Group, and ~~the FOX Network~~Fox Broadcasting Corporation induced TCFTV’s breach of contract and intentionally interfered with the plaintiffs’ contracts with TCFTV. ~~These allegations were based on plaintiffs’ claims that in licensing~~ ~~Bones~~ ~~between affiliated~~During the quarter ended September 30, 2019, the parties amicably resolved the lawsuits, and the Company contributed $34 million pursuant to a settlement agreement with the plaintiffs and The Walt Disney Company as successor to 21CF, ~~entities, the defendants agreed to lower license fees for~~ ~~Bones~~ ~~to the detriment of the Plaintiffs (collectively, the “Affiliated Dealing Claims”). The plaintiffs also challenged TCFTV’s accounting practices with regard to~~ ~~Bones, including challenging TCFTV’s~~Fox Entertainment Group, Twentieth Century Fox Film Corporation, and TCFTV.

1417

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

~~distribution~~Profits participation litigation is subject to uncertainty and ~~overhead charges for~~ ~~Bones~~ ~~(the “Accounting Claims”). The defendants vigorously disputed the Affiliated Dealing Claims and the Accounting Claims and the related allegations.~~

~~On April 8, 2016, the Los Angeles Superior Court stayed the Accounting Claims and ordered~~it is possible that ~~the Affiliated Dealing Claims~~there could be ~~submitted to arbitration pursuant to the plaintiffs’ contracts. On February 20,~~adverse developments in pending or future cases that could involve a FOX subsidiary. As of December 31, 2019, the ~~arbitrator issued~~Company does not believe that it has incurred a punitive damages award of approximately $129 million against the defendants, including the FOX Network. On February 27, 2019, the defendants filed a motion with the Los Angeles Superior Court to vacate the entire punitive damages award on the ground that the arbitrator did not have authority to award punitive damages, and the plaintiffs filed a petition with the court to confirm the entirety of the arbitrator’s award. A hearing on these matters is scheduledprobable material loss for ~~April 29, 2019. The Company would be responsible for a portion of the arbitrator’s punitive damages award if it were sustained, and the Company intends to vigorously defend against such award.~~any other activities.

FOX News ~~Channel~~

The Company and certain of its current and former employees have been subject to allegations of sexual harassment and discrimination and racial discrimination relating to alleged misconduct at the Company’s FOX News ~~channel~~ business. The Company has resolved many of these claims and is contesting other claims in litigation. The Company has also received regulatory and investigative inquiries relating to these matters. To date, none of the amounts paid in settlements or reserved for pending or future claims, is individually or in the aggregate, material to the Company. The amount of liability, if any, that may result from these or related matters cannot be estimated at this time. However, the Company does not currently anticipate that the ultimate resolution of any such pending matters will have a material adverse effect on its business, financial condition, ~~future~~ results of operations or ~~liquidity.~~cash flows.

U.K. Newspaper Matters Indemnity

In connection with the separation of 21CF and News Corporation in June 2013, 21CF agreed to indemnify News Corporation, on an after-tax basis, for payments made after the separation arising out of civil claims and investigations relating to phone hacking, illegal data access and inappropriate payments to public officials that occurred at subsidiaries of News Corporation, as well as legal and professional fees and expenses paid in connection with the related criminal matters, other than fees, expenses and costs relating to employees who are not (i) directors, officers or certain designated employees or (ii) with respect to civil matters, co-defendants with News Corporation (the “U.K. Newspaper Matters Indemnity”). In accordance with the Separation Agreement, certain costs and liabilities related to the U.K. Newspaper Matters Indemnity ~~will be allocated to~~were assumed by the Company. The liability recorded in the ~~Combined~~ Balance Sheets related to the indemnity was approximately ~~$45~~$60 million and $50 million as of December 31, ~~2018~~2019 and June 30, ~~2018,~~2019, respectively.

Other

Equity purchase arrangements that are exercisable by the counterparty to the agreement, and that are outside the sole control of the Company, are accounted for in accordance with ASC 480-10-S99-3A and are classified as Redeemable noncontrolling interests in the Combined Balance Sheets. Other than the arrangements classified as Redeemable noncontrolling interests, the Company is also a party to other purchase and sale arrangements which become exercisable at various points in time. However, these arrangements are currently either not exercisable in the next twelve months or are not material.

The Company establishes an accrued liability for legal claims and indemnification claims when the Company 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. Any fees, expenses, fines, penalties, judgments or settlements which might be incurred by the Company in connection with the various proceedings could affect the Company’s results of operations and financial condition. For the contingencies disclosed above for which there is at least a reasonable possibility that a loss may be incurred, other than the accrual provided, the Company was unable to estimate the amount of loss or range of loss.

The Company’s operations are subject to tax in various domestic jurisdictions and as a matter of course, the Company is regularly audited by federal and state tax authorities. The Company believes it has appropriately accrued for the expected outcome of all pending tax matters and does not currently anticipate that the ultimate resolution of pending

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS~~

tax matters will have a material adverse effect on its ~~combined~~consolidated financial condition, future results of operations or liquidity. Each member of the 21CF consolidated group, which includes 21CF, the Company (prior to the Distribution) and 21CF’s other subsidiaries, is jointly and severally liable for the U.S. federal incomeand, in certain jurisdictions, state tax ~~liability~~liabilities of each other member of the consolidated group. Consequently, the Company could be liable in the event any such liability is incurred, and not discharged, by any other member of the 21CF consolidated group. The tax matters agreement ~~will require~~requires 21CF and/or Disney to indemnify the Company for any such liability. Disputes or assessments could arise during future audits by the Internal Revenue Service in amounts that the Company cannot quantify.

NOTE ~~10.~~12. PENSION AND OTHER POSTRETIREMENT BENEFITS

~~Certain of the Company’s U.S. employees participated~~The Company participates in ~~defined benefit~~and/or sponsors various pension, savings and postretirement plans sponsored by 21CF (“Shared Plans”), which include participants of other 21CF subsidiaries. Plans that are sponsored by entities included in the Company are accounted for as defined benefit pension plans.

~~Shared Plans were accounted for as multiemployer~~ benefit plans. ~~Therefore, no asset or liability was recorded to recognize the funded status. The related pension expenses allocated to the Company were based primarily on benefits earned by active employees~~Pension plans and ~~accounted for in a manner similar to a defined contribution plan.~~

In contemplation of the Separation, during the second quarter of fiscal 2019, the pension benefit assets and liabilities of the Shared Plans allocable to the Company’s employees were transferred to the Company. Assets of $630 million, projected benefit obligations of $765 million and $188 million of accumulated other comprehensive loss ($143 million, net of tax) were recorded for pension benefits transferred from 21CF. Subsequent to December 31, 2018, the postretirement benefit ~~plan liabilities allocable~~plans are closed to new participants with the ~~Company’s employees were transferred to the Company. Projected benefit obligations~~exception of ~~$98 million and $18 million of accumulated other comprehensive loss ($14 million, net of tax) were recorded for postretirement benefits transferred from 21CF in January 2019.~~

a small group covered by collective bargaining agreements. The net periodic benefit cost was ~~$14~~$13 million and ~~$63~~$14 million for the three months ended December 31, ~~2018~~2019 and ~~2017,~~2018, respectively, and $27 ~~million and $74~~ million for the six months ended December 31, ~~2018~~2019 and ~~2017, respectively, which primarily relates to Shared Plans.~~2018.

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

NOTE ~~11.~~13. SEGMENT INFORMATION

The Company is a news, sports and entertainment company, which manages and reports its businesses in the following segments:

~~Cable Network Programming~~, which principally consists of the production and licensing of news and sports content distributed primarily through cable television systems, direct broadcast satellite operators, telecommunication companies and online video distributors (collectively, multi-channel video programming distributors), primarily in the U.S.

•

Cable Network Programming, which principally consists of the production and licensing of news and sports content distributed primarily through traditional cable television systems, direct broadcast satellite operators and telecommunication companies (“traditional MVPDs”) and online multi-channel video programming distributors (“digital MVPDs”), primarily in the U.S.

~~Television~~, which principally consists of the acquisition, marketing and distribution of broadcast network programming nationally under the FOX brand and the operation of 28 full power broadcast television stations, including 11 duopolies, in the U.S. (of these stations, 17 are affiliated with the FOX Network, nine are affiliated with MyNetworkTV, one is affiliated with both The CW Television Network and MyNetworkTV and one is an independent station).

•

Television, which principally consists of the acquisition, marketing and distribution of broadcast network programming nationally under the FOX brand and the operation of 28 full power broadcast television stations, including 11 duopolies, in the U.S. Of these stations, 17 are affiliated with the FOX Network, 10 are affiliated with MyNetworkTV and 1 is an independent station.

~~Other, Corporate and Eliminations~~, which principally consists of corporate overhead costs, intracompany eliminations and the FOX Studios lot. The FOX Studios lot, located in Los Angeles, California, provides television and film production services along with office space, studio operation services and includes all operations of the facility.

•

Other, Corporate and Eliminations, which principally consists of corporate overhead costs, intracompany eliminations, the FOX Studios lot and Credible. The FOX Studios lot, located in Los Angeles, California, provides television and film production services along with office space, studio operation services and includes all operations of the facility. Credible is a U.S. consumer finance marketplace.

The Company’s operating segments have been determined in accordance with the Company’s internal management structure, which is organized based on operating activities. The Company evaluates performance based upon several factors, of which the primary financial measure is segment operating income before depreciation and amortization, or Segment ~~OIBDA.~~EBITDA. Due to the integrated nature of these operating segments, estimates and judgments are made in allocating certain assets, revenues and expenses.

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS~~

Beginning with the announcement of the Company’s financial results for the third quarter of fiscal 2019, the Company has renamed as “Segment EBITDA” the measure that it previously referred to as “Segment OIBDA.” The definition of this measure has not changed: Segment ~~OIBDA~~EBITDA is defined as Revenues less Operating expenses and Selling, general and administrative expenses. Segment ~~OIBDA~~EBITDA does not include: Amortization of cable distribution investments, Depreciation and amortization, Impairment and restructuring charges, Interest expense, Interest income, Other, net and Income tax ~~(expense) benefit.~~expense. Management believes that Segment ~~OIBDA~~EBITDA is an appropriate measure for evaluating the operating performance of the Company’s business segments because it is the primary measure used by the Company’s chief operating decision maker to evaluate the performance of and allocate resources to the Company’s businesses.

Management believes that information about Total Segment OIBDA assists all users of the Company’s Unaudited Combined Financial Statements by allowing them to evaluate changes in the operating results of the Company’s portfolio of businesses separate from non-operational factors that affect net income, thus providing insight into both operations and the other factors that affect reported results. Total Segment OIBDA provides management, investors and equity analysts a measure to analyze the operating performance of the Company’s business and its enterprise value against historical data and competitors’ data, although historical results, including Segment OIBDA and Total Segment OIBDA, may not be indicative of future results (as operating performance is highly contingent on many factors, including customer tastes and preferences).19

FOX CORPORATION

Total Segment OIBDA may be considered a non-GAAP measure and should be considered in addition to, not as a substitute for, net income, 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 charges, which are significant components in assessing the Company’s financial performance.NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

~~The following table reconciles Income before income tax (expense) benefit to Total Segment OIBDA for the three and six months ended December 31, 2018 and 2017:~~

For the three months ended December 31,

For the six months ended December 31,

2018

2017

2018

2017

(in millions)

Income before income tax (expense) benefit

$
31

$
312

$
862

$
923

Add

Amortization of cable distribution investments

9

20

19

32

Depreciation and amortization

51

42

94

83

Interest expense

15

6

31

13

Other, net

339

93

200

95

Total Segment OIBDA

$
445

$
473

$
1,206

$
1,146

The following tables set forth the Company’s Revenues and Segment ~~OIBDA~~EBITDA for the three and six months ended December 31, ~~2018~~2019 and ~~2017:~~2018:

	For the three months ended December 31,						For the six months ended December 31,						For the three months ended December 31,						For the six months ended December 31,
	2018			2017			2018			2017			2019			2018			2019			2018
	(in millions)												(in millions)
Revenues
Cable Network Programming	$	1,434		$	1,315		$	2,699		$	2,453		$	1,469		$	1,434		$	2,754		$	2,699
Television		2,149			1,793			3,426			2,844			2,266			2,149			3,622			3,426
Other, Corporate and Eliminations		-			-			(1	)		(1	)		43			-			69			(1	)

Total revenues	$	3,583		$	3,108		$	6,124		$	5,296		$	3,778		$	3,583		$	6,445		$	6,124
Segment OIBDA
Segment EBITDA
Cable Network Programming	$	519		$	462		$	1,152		$	1,038		$	556		$	519		$	1,240		$	1,152
Television		(14	)		62			157			187			(214	)		(14	)		37			157
Other, Corporate and Eliminations		(60	)		(51	)		(103	)		(79	)		(81	)		(60	)		(160	)		(103	)
Amortization of cable distribution investments														(5	)	(9		)		(14	)		(19	)
Depreciation and amortization														(57	)		(51	)		(107	)		(94	)
Impairment and restructuring charges														-			-			(9	)		-
Interest expense														(90	)		(15	)		(180	)		(31	)
Interest income														8			-			25			-
Other, net														302			(339	)		287			(200	)

Total Segment OIBDA	$	445		$	473		$	1,206		$	1,146
Income before income tax expense														419			31			1,119			862
Income tax expense														(105	)		(7	)		(292	)		(223	)

Net income														314			24			827			639
Less: Net income attributable to noncontrolling interests														(14	)		(16	)		(28	)		(27	)

Net income attributable to Fox Corporation stockholders													$	300		$	8		$	799		$	612

Revenues by Segment by Component

	For the three months ended December 31,				For the six months ended December 31,
	2019		2018		2019		2018
	(in millions)
Cable Network Programming
Affiliate fee	$	957	$	938	$	1,896	$	1,877
Advertising		337		353		591		617
Other		175		143		267		205

Total Cable Network Programming revenues		1,469		1,434		2,754		2,699
Television
Advertising		1,673		1,634		2,460		2,433
Affiliate fee		479		407		934		805
Other		114		108		228		188

Total Television revenues		2,266		2,149		3,622		3,426
Other, Corporate and Eliminations		43		-		69		(1	)

Total revenues	$	3,778	$	3,583	$	6,445	$	6,124

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Revenues by Component

For the three months ended December 31,

For the six months ended December 31,

2018

2017

2018

2017

(in millions)

Revenues

Affiliate fee

$
1,345

$
1,174

$
2,682

$
2,329

Advertising

1,987

1,732

3,050

2,620

Other

251

202

392

347

Total revenues

$
3,583

$
3,108

$
6,124

$
5,296

Revenues by Segment by Component

For the three months ended December 31,

For the six months ended December 31,

2018

2017

2018

2017

(in millions)

Cable Network Programming

Affiliate fee

$
938

$
848

$
1,877

$
1,678

Advertising and other

496

467

822

775

Total Cable Network Programming revenues

1,434

1,315

2,699

2,453

Television

Advertising

1,634

1,411

2,433

2,061

Affiliate fee and other

515

382

993

783

Total Television revenues

2,149

1,793

3,426

2,844

Other, Corporate and Eliminations

-

-

(1
)

(1
)

Total revenues

$
3,583

$
3,108

$
6,124

$
5,296

Future Performance Obligations

As of December 31, ~~2018,~~2019, approximately ~~$2.3~~$4 billion of revenues are expected to be recognized primarily over the next one to three years. The Company’s most significant remaining performance obligations relate to affiliate contracts and sports rights sublicensing contracts with fixed fees. The amount disclosed does not include (i) revenues related to performance obligations that are part of a contract whose original expected duration is one year or less, (ii) revenues that are in the form of sales- or usage-based royalties and (iii) revenues related to performance obligations for which the Company elects to recognize revenue in the amount it has a right to invoice.

	For the three months ended December 31,				For the six months ended December 31,				For the three months ended December 31,				For the six months ended December 31,
	2018		2017		2018		2017		2019		2018		2019		2018
	(in millions)								(in millions)
Depreciation and amortization
Cable Network Programming	$	12	$	9	$	23	$	18	$	16	$	12	$	29	$	23
Television		26		28		52		55		14		26		29		52
Other, Corporate and Eliminations		13		5		19		10		27		13		49		19

Total depreciation and amortization	$	51	$	42	$	94	$	83	$	57	$	51	$	107	$	94

	As of December 31, 2019		As of June 30, 2019
	(in millions)
Assets
Cable Network Programming	$	2,721	$	2,584
Television		7,767		6,598
Other, Corporate and Eliminations		8,734		9,462
Investments		1,228		865

Total assets	$	20,450	$	19,509

	As of December 31, 2019		As of June 30, 2019
	(in millions)
Goodwill and intangible assets, net
Cable Network Programming	$	1,286	$	1,246
Television		3,922		3,891
Other, Corporate and Eliminations		694		405

Total goodwill and intangible assets, net	$	5,902	$	5,542

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

As of
December 31, 2018

As of
June 30, 2018

(in millions)

Assets

Cable Network Programming

$
2,545

$
2,430

Television

7,591

6,805

Other, Corporate and Eliminations

3,041

3,611

Investments

289

275

Total assets

$
13,466

$
13,121

NOTE ~~12.~~14. ADDITIONAL FINANCIAL INFORMATION

Other, net

The following table sets forth the components of Other, net included in the ~~Unaudited Combined~~ Statements of Operations:

For the three months ended December 31,

For the six months ended December 31,

2018

2017

2018

2017

(in millions)

Acquisition related and other transaction costs^(a)

$
(38
)

$
(32
)

$
(78
)

$
(32
)
Unrealized losses on investments^(b)

(255
)

-

(72
)

-

U.K. Newspaper Matters Indemnity^(c)

(21
)

(10
)

(30
)

3

Settlement loss related to pension plans^(d)

-

(50
)

-

(50
)
Other

(25
)

(1
)

(20
)

(16
)

Total other, net

$
(339
)

$
(93
)

$
(200
)

$
(95
)

	For the three months ended December 31,						For the six months ended December 31,
	2019			2018			2019			2018
	(in millions)
Unrealized gains (losses) on investments^(a)	$	328		$	(255	)	$	371		$	(72	)
U.K. Newspaper Matters Indemnity^(b)		(31	)		(21	)		(44	)		(30	)
Transaction costs^(c)		2			(38	)		(43	)		(78	)
Other		3			(25	)		3			(20	)

Total other, net	$	302		$	(339	)	$	287		$	(200	)

^(a)	Represents the net unrealized gains (losses) related to changes in fair value of the Company’s investments in equity securities which are recognized in the Statements of Operations in accordance with ASC 321 (See Note 4—Fair Value).

^(b)	See Note 11—Commitments and Contingencies under the heading “U.K. Newspaper Matters Indemnity.”

^(c)	The ~~acquisition related and other~~ transaction costs for the three and six months ended December 31, 2019 and 2018 are primarily related to the Separation and the Distribution ~~which includes~~and include retention related ~~costs.~~

^(b)

~~Represents~~costs and for the ~~unrealized losses related to changes in fair value of~~six months ended December 31, 2019 also includes costs associated with the ~~Company’s investment in Roku which are recognized in net income in accordance with ASU 2016-01~~profits participants litigation (See Note ~~1 - Description of Business~~11—Commitments and ~~Basis of Presentation~~Contingencies under the heading ~~“Recently Adopted and Recently Issued Accounting Guidance and U.S. Tax Reform”~~“Profits Participants Litigation”).

⁽^c⁾	~~See Note 9 - Commitments and Contingencies.~~

⁽^d⁾

The ~~settlement loss was primarily related~~transaction costs for the three months ended December 31, 2019 were offset by an adjustment to the ~~Shared Plans (See Note 12 - Pension~~receivables from Disney pursuant to the Separation and ~~Other Postretirement Benefits in the Form 10).~~Distribution Agreement.

~~Receivables, net~~

Receivables are presented net of an allowance for doubtful accounts, which is an estimate of amounts that may not be collectible. Allowances for doubtful accounts as of December 31, 2018 and June 30, 2018 were $34 million and $28 million, respectively.

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS~~

Other Non-Current Assets

The following table sets forth the components of Other non-current assets included in the ~~Combined~~ Balance Sheets:

	As of December 31, 2018		As of June 30, 2018		As of December 31, 2019		As of June 30, 2019
	(in millions)				(in millions)
Investments^(a)	$	289	$	275	$	1,228	$	865
Operating lease ROU assets						533		-
Inventories, net		155		121		198		205
Other^(b)		389		363		463		455

Total other non-current assets	$	833	$	759	$	2,422	$	1,525

^(a)

Includes ~~an investment with a readily determinable~~investments accounted for at fair value on a recurring basis of ~~$185 million~~$1.1 billion and ~~$257~~$761 million as of December 31, ~~2018~~2019 and June 30, ~~2018,~~2019, respectively (See Note ~~4 -~~ 4—Fair Value). ~~See Note 2 - Acquisitions, Disposals and Other Transactions for information on recent investments.~~

^(b)

~~Other includes $230~~Includes $253 million and ~~$265~~$249 million as of ~~December 31, 2018 and June 30, 2018, respectively, related to~~assets in the Grantor Trust (as defined in Note ~~12 -~~ 14—Pension and Other Postretirement Benefits in the 2019 Form ~~10).~~10-K) as of December 31, 2019 and June 30, 2019, respectively.

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Accounts Payable, Accrued Expenses and Other Current Liabilities

The following table sets forth the components of Accounts payable, accrued expenses and other current liabilities included in the ~~Combined~~ Balance Sheets:

	As of December 31, 2018		As of June 30, 2018		As of December 31, 2019		As of June 30, 2019
	(in millions)				(in millions)
Accrued expenses					$	832	$	835
Program rights payable	$	443	$	380		535		514
Accrued expenses		428		530
Deferred revenue		129		147		158		169
Income taxes payable^(a)		127		553
Operating lease liabilities						142		-
Other current liabilities		114		149		149		194

Total accounts payable, accrued expenses and other current liabilities	$	1,241	$	1,759	$	1,816	$	1,712

^(a)

As discussed in Note 1 - Description of Business and Basis of Presentation, income tax items have been calculated as if the Company filed a separate return and was operating as a standalone business. Therefore, tax balances reflected in the Combined Financial Statements may not be reflective of the Company’s actual tax balances prior to or subsequent to the Distribution.

Other Liabilities

The following table sets forth the components of Other liabilities included in the ~~Combined~~ Balance Sheets:

As of
December 31, 2018

As of
June 30, 2018

(in millions)

Accrued noncurrent pension liabilities^(a)

$
377

$
244

Other noncurrent liabilities

230

178

Total other liabilities

$
607

$
422

	As of December 31, 2019		As of June 30, 2019
	(in millions)
Accrued non-current pension/postretirement liabilities	$	547	$	543
Non-current operating lease liabilities		429		-
Other non-current liabilities		336		356

Total other liabilities	$	1,312	$	899

Supplemental Cash Flows Information

^(a)

For the six months ended December 31,

2019

2018

(in millions)

Supplemental cash flows information

Cash paid for interest

$
(191
)

$
(29
)

Cash paid for income taxes

$
(35
)

$
-

Supplemental information on acquisitions

Fair value of assets acquired, excluding cash

$
404

$
-

Cash acquired

15

-

Liabilities assumed

(35
)

-

Noncontrolling interests

(109
)

-

Cash paid

(275
)

-

Fair value of equity instruments consideration

$
-

$
-

The increase in accrued noncurrent pension liabilities was related to the pension benefit assets and liabilities of the Shared Plans allocable to the Company’s employees transferred to the Company during the second quarter of fiscal 2019 (See Note 10 - Pension and Other Postretirement Benefits).

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FI~~NANCIAL~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Readers should carefully review this document and the other documents filed by Fox Corporation with the Securities and Exchange Commission (the “SEC”). This section should be read together with the unaudited interim consolidated and combined financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q ~~as well as~~and the ~~audited combined financial statements~~Annual Report on Form 10-K for the fiscal year ended June 30, ~~2018 and other disclosure included in the Form 10~~ 2019 as ~~amended and~~ filed with the SEC on ~~January 7,~~August 9, 2019 (the ~~“Form 10”~~“2019 Form 10-K”).

INTRODUCTION

The ~~Proposed~~ Distribution

On ~~June 20, 2018,~~March 19, 2019, Fox Corporation (“FOX” or the “Company”) became a standalone publicly traded company through the pro rata distribution by Twenty-First Century Fox, Inc. (now known as TFCF Corporation) (“~~Twenty-First Century Fox” or “21CF”~~21CF”)~~, The Walt Disney Company (“Disney”), TWDC Holdco 613 Corp., a wholly-owned subsidiary~~ of Disney (“New Disney”), and certain other subsidiaries of Disney entered into an Amended and Restated Merger Agreement and Plan of Merger, dated June 20, 2018 (the “21CF Disney Merger Agreement”), pursuant to which, among other things, 21CF will merge with and into a subsidiary of New Disney (the “21CF Merger”), Disney will merge with and into a subsidiary of New Disney (the “Disney ~~Merger,”~~ ~~and together with the 21CF~~ ~~Merger,~~ ~~the “mergers”), and each of Disney and 21CF will become wholly-owned subsidiaries of New~~ ~~Disney.~~ ~~A condition to the consummation of the mergers includes the consummation of the Distribution (as defined below).~~

In connection with the 21CF Disney Merger Agreement and prior to the Distribution, 21CF and its wholly owned subsidiary, Fox Corporation (“FOX” or the “Company”), expect to enter into a separation agreement ~~(the “Separation Agreement”)~~, which will become effective on March 19, 2019. Pursuant to the Separation Agreement, 21CF will, among other things, engage in the separation (the “Separation”), whereby it will transfer to FOX a portfolio of 21CF’s news, sports and broadcast businesses, including ~~FOX News~~, ~~FOX Business, FOX Broadcasting Company (the “FOX Network”),~~ ~~FOX Sports~~, FOX Television Stations Group, and sports cable networks FS1, FS2, FOX Deportes and Big Ten Network (collectively, the “FOX business”), and certain other assets, and FOX will assume from 21CF certain liabilities associated with such businesses and certain other liabilities. 21CF will retain all assets and liabilities not transferred to FOX, including the Twentieth Century Fox film and television studios and certain cable and international television businesses. Following the Separation and prior to the completion of the mergers, 21CF will distribute all of the issued and outstanding common stock of FOX to ~~21CF’s~~21CF stockholders (other than holders that ~~are~~were subsidiaries of 21CF) ~~on a pro rata basis~~ ~~(the~~(the “Distribution”), in accordance with the Amended and Restated Distribution Agreement and Plan of Merger, dated as of June 20, 2018, by and between 21CF and 21CF Distribution Merger Sub, Inc. Following the Distribution, 354 million and 266 million shares of the Company’s Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”), and Class B Common Stock, par value $0.01 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”), respectively, began trading independently on The Nasdaq Global Select Market. In connection with the Distribution, the Company entered into the Separation and Distribution Agreement, dated as of March 19, 2019 (the “Separation Agreement”), with 21CF, which effected the internal restructuring (the “Separation”) whereby 21CF transferred to FOX a portfolio of 21CF’s news, sports and broadcast businesses, including FOX News Media (consisting of FOX News and FOX Business), FOX Entertainment, FOX Sports, FOX Television Stations, and sports cable networks FS1, FS2, FOX Deportes and Big Ten Network, and certain other assets, and FOX assumed from 21CF the liabilities associated with such businesses and certain other liabilities. The Separation and the Distribution ~~are anticipated to be completed on March 19, 2019~~were effected as part of ~~the~~a series of transactions contemplated by the ~~21CF Disney~~Amended and Restated Merger Agreement ~~(collectively, the “Transactions”). Following the completion~~and Plan of ~~the Separation~~Merger, dated as of June 20, 2018, by and ~~Distribution, FOX will become~~among 21CF, The Walt Disney Company (“Disney”) and certain subsidiaries of Disney, pursuant to which, among other things, 21CF became a ~~standalone public company.~~wholly-owned subsidiary of Disney.

Immediately prior to the Distribution, FOX will pay to 21CF a dividend in the amount of $8.5 billion (the “Dividend”), in immediately available funds. FOX has incurred indebtedness (See Note 5 – Borrowings to the accompanying Unaudited Combined Financial Statements of FOX) that will be, together with available cash, sufficient to fund the Dividend, which cash will be replenished and/or indebtedness will be reduced after the mergers by the amount of the Cash Payment (as defined below), if any.

In connection with the ~~Transactions,~~Separation, the Company ~~expects to enter~~entered into ~~certain other related~~several agreements ~~which~~that govern certain aspects of the Company’s relationship with 21CF and Disney following the ~~Separation~~ ~~and which will become effective on March 19, 2019.~~Separation. These include ~~(i)~~the Separation Agreement, a tax matters agreement, ~~(ii)~~a transition services agreement, as well as agreements relating to intellectual property ~~license agreements, (iii)~~licenses, employee matters, commercial arrangements and a studio lot lease (See Note 1—Description of Business and ~~management agreement, (iv) transition services agreements, (v) commercial agreements and (vi) an employee matters agreement.~~

~~In addition, as a result~~Basis of Presentation in the ~~Separation and~~ ~~Distribution, FOX will obtain a tax basis in its assets equal to their respective fair market values, which is expected to result in~~2019 Form 10-K for additional ~~annual tax deductions, principally over the next 15 years.~~ information).

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 Business~~ - This section provides a general description of the Company’s businesses, as well as developments that occurred during the three and six months ended December 31, 2018 and 2017 that the Company believes are important in understanding its results of operations and financial condition or to disclose known trends.

•

Overview of the Company’s Business—This section provides a general description of the Company’s businesses, as well as developments that occurred during the three and six months ended December 31, 2019 and 2018 that the Company believes are important in understanding its results of operations and financial condition or to disclose known trends.

~~Results of Operations~~ - This section provides an analysis of the Company’s results of operations for the three and six months ended December 31, 2018 and 2017. This analysis is presented on both a combined and a segment basis. In addition, a brief description is provided of significant transactions and events that impact the comparability of the results being analyzed.

•

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 and 2018. This analysis is presented on both a consolidated/combined and a segment basis. In addition, a brief description is provided of significant transactions and events that impact the comparability of the results being analyzed.

•

Liquidity and Capital Resources—This section provides an analysis of the Company’s cash flows for the six months ended December 31, 2019 and 2018, as well as a discussion of the Company’s outstanding debt and commitments that existed as of December 31, 2019. Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to fund the Company’s future commitments and obligations, as well as a discussion of other financing arrangements.

~~Liquidity and Capital Resources~~ - This section provides an analysis of the Company’s cash flows for the six months ended December 31, 2018 and 2017, as well as a discussion of the Company’s commitments that existed as of December 31, 2018. Included is a discussion of the amount of financial capacity available to fund the Company’s future commitments and obligations, as well as a discussion of other financing arrangements.

•

Caution Concerning Forward-Looking Statements—This section provides a description of the use of forward-looking information appearing in this Quarterly Report on Form 10-Q, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations. Such information is based on management’s current expectations about future events which are subject to change and to inherent risks and uncertainties. Refer to Part I., Item 1A, “Risk Factors” in the 2019 Form 10-K and Part II., Item 1A. “Risk Factors” in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, as filed with the SEC on November 6, 2019 (the “Q1 2020 Form 10-Q”) for a discussion of the risk factors applicable to the Company.

OVERVIEW OF THE COMPANY’S BUSINESS

The Company is a news, sports and entertainment company, which manages and reports its businesses in the following segments:

•

Cable Network Programming, which principally consists of the production and licensing of news and sports content distributed primarily through traditional cable television systems, direct broadcast satellite operators and telecommunication companies (“traditional MVPDs”), and online ~~video distributors (collectively,~~ multi-channel video programming ~~distributors)~~distributors (“digital MVPDs”), primarily in the U.S.

~~Television~~
•
Television, which principally consists of the acquisition, marketing and distribution of broadcast network programming nationally under the FOX brand and the operation of 28 full power broadcast television stations, including 11 duopolies, in the U.S. Of these stations, 17 are affiliated with the FOX Network, 10 are affiliated with MyNetworkTV and one is an independent station.

•

Other, Corporate and Eliminations, which principally consists of corporate overhead costs, intracompany eliminations, the FOX Studios lot and Credible Labs Inc. (“Credible”). The FOX Studios lot, located in Los Angeles, California, provides television and film production services along with office space, studio operation services and includes all operations of the facility. Credible is a U.S. consumer finance marketplace.

Other Business Developments

On November 6, 2019, the Company announced that its Board of Directors had authorized a stock repurchase program providing for the repurchase of $2 billion of the ~~acquisition, marketing~~Company’s Common Stock. The program has no time limit and ~~distribution~~may be modified, suspended or discontinued at any time. The Company also announced that it had entered into an accelerated share repurchase agreement to repurchase $350 million of Class A Common Stock and announced its intention to promptly repurchase $150 million of Class B Common Stock. At the same time, the Company announced that it had entered into a stockholders agreement with the Murdoch Family Trust (See Note 8—Stockholders’ Equity to the accompanying Unaudited Consolidated and Combined Financial Statements of FOX under the headings “Stock Repurchase Program” and “Stockholders Agreement” for further discussion).

In November 2019, the Company entered into an agreement with Nexstar Media Group, Inc. (“Nexstar”) to acquire three television stations (FOX-affiliate KCPQ and MyNetworkTV-affiliate KZJO located in Seattle, Washington and FOX-affiliate WITI located in Milwaukee, Wisconsin) for approximately $350 million. As part of this transaction, the Company has agreed to sell Nexstar two television stations located in Charlotte, North Carolina, FOX-affiliate WJZY and MyNetworkTV-affiliate WMYT, for approximately $45 million. The Company and Nexstar have obtained regulatory approvals and completion of the transaction is expected to occur during the third quarter of fiscal 2020, subject to the satisfaction or waiver of other customary closing conditions.

In October 2019, the Company acquired 67% of the equity in Credible for approximately A$390 million (approximately $260 million) in cash (the “Credible Acquisition”), net of cash acquired. In addition, the Company has agreed to contribute up to $75 million of capital to Credible over approximately two years following the closing of the Credible Acquisition (See Note 2—Acquisitions, Disposals and Other Transactions to the accompanying Unaudited Consolidated and Combined Financial Statements of FOX under the heading “Credible Acquisition” for further discussion).

The United States Court of Appeals for the Third Circuit issued its decision in Prometheus Radio Project v. FCC in the Fall of 2019, which reinstated the Federal Communications Commission’s (“FCC”) newspaper/broadcast cross-ownership rule prohibiting common ownership of broadcast ~~network programming nationally under~~stations and daily newspapers in the ~~FOX brand and~~same designated market area (“DMA”). The FCC implemented the ~~operation of 28 full power broadcast~~reinstatement on December 20, 2019. The Company owns two television stations ~~including 11 duopolies,~~ in the ~~U.S. (of these stations, 17 are affiliated with~~New York DMA and an attributable interest in The New York Post due to the ~~FOX Network, nine are affiliated with MyNetworkTV, one is affiliated with~~Murdoch Family Trust’s ownership interests in both the Company and News Corporation. The ~~CW Television Network and MyNetworkTV and one is an independent station).~~

~~Fiscal~~cross-ownership rule from the FCC, but the timing and outcome of such a filing are uncertain. For more information, see “Part I. Item 1. Business - Government Regulation” in the 2019 ~~Affiliate Fee Outlook~~

The Company expects the pace of growth of Cable Network Programming affiliate fee revenue to meaningfully decelerate over the remaining six months of the fiscal year compared to the prior year, as the Company lapses prior year contractual rate increases from affiliate agreement renewals.Form 10-K.

RESULTS OF OPERATIONS

Results of Operations—For the three and six months ended December 31, ~~2018~~2019 versus the three and six months ended December 31, ~~2017~~2018

The following table sets forth the Company’s operating results for the three and six months ended December 31, ~~2018,~~2019, as compared to the three and six months ended December 31, ~~2017:~~

2018:

	For the three months ended December 31,													For the six months ended December 31,													For the three months ended December 31,													For the six months ended December 31,
	2018			2017			Change			% Change				2018			2017			Change			% Change				2019			2018			Change			% Change				2019			2018			Change			% Change
	(in millions, except %)																										(in millions, except %)
Revenues
Affiliate fee	$	1,345		$	1,174		$	171			15		%	$	2,682		$	2,329		$	353			15		%	$	1,436		$	1,345		$	91			7		%	$	2,830		$	2,682		$	148			6	%
Advertising		1,987			1,732			255			15		%		3,050			2,620			430			16		%		2,010			1,987			23			1		%		3,051			3,050			1			-	%
Other		251			202			49			24		%		392			347			45			13		%		332			251			81			32		%		564			392			172			44	%

Total revenues		3,583			3,108			475			15		%		6,124			5,296			828			16		%		3,778			3,583			195			5		%		6,445			6,124			321			5	%
Operating expenses		(2,818	)		(2,346	)		(472	)		20		%		(4,309	)		(3,610	)		(699	)		19		%		(3,091	)		(2,818	)		(273	)		10		%		(4,559	)		(4,309	)		(250	)		6	%
Selling, general and administrative		(329	)		(309	)		(20	)		6		%		(628	)		(572	)		(56	)		10		%		(431	)		(329	)		(102	)		31		%		(783	)		(628	)		(155	)		25	%
Depreciation and amortization		(51	)		(42	)		(9	)		21		%		(94	)		(83	)		(11	)		13		%		(57	)		(51	)		(6	)		12		%		(107	)		(94	)		(13	)		14	%
Impairment and restructuring charges																												-			-			-		-			%		(9	)		-			(9	)	**
Interest expense		(15	)		(6	)		(9	)	**					(31	)		(13	)		(18	)	**					(90	)		(15	)		(75	)	**					(180	)		(31	)		(149	)	**
Interest income																												8			-			8		**					25			-			25		**
Other, net		(339	)		(93	)		(246	)	**					(200	)		(95	)		(105	)	**					302			(339	)		641		**					287			(200	)		487		**

Income before income tax (expense) benefit		31			312			(281	)		(90	)	%		862			923			(61	)		(7	)	%
Income tax (expense) benefit		(7	)		570			(577	)	**					(223	)		359			(582	)	**
Income before income tax expense																												419			31			388		**					1,119			862			257			30	%
Income tax expense																												(105	)		(7	)		(98	)	**					(292	)		(223	)		(69	)		31	%

Net income		24			882			(858	)		(97	)	%		639			1,282			(643	)		(50	)	%		314			24			290		**					827			639			188			29	%
Less: Net income attributable to noncontrolling interests		(16	)		(13	)		(3	)		23		%		(27	)		(23	)		(4	)		17		%		(14	)		(16	)		2			(13	)	%		(28	)		(27	)		(1	)		4	%

Net income attributable to FOX	$	8		$	869		$	(861	)		(99	)	%	$	612		$	1,259		$	(647	)		(51	)	%
Net income attributable to Fox Corporation stockholders																											$	300		$	8		$	292		**				$	799		$	612		$	187			31	%

^**	not meaningful

Overview – —The Company’s revenues increased ~~15% and 16%~~5% for the three and six months ended December 31, 2019, as compared to the corresponding periods of fiscal 2019. The increase in affiliate fee revenue was primarily due to higher average rates per subscriber and higher fees received from television stations that are affiliated with the FOX Network, partially offset by the impact of a lower average number of subscribers. The increase in advertising revenue was primarily due to higher pricing for linear advertising at the FOX Network, increased digital advertising revenue and two additional broadcasts of Major League Baseball (“MLB”) World Series games, partially offset by lower political advertising revenue at the FOX Television Stations due to the U.S. midterm elections in November 2018 and, for the six months ended December 31, 2019, the effect of fewer broadcasts of Fédération Internationale de Football Association (“FIFA”) World Cup events. The increase in other revenues was primarily due to revenues generated from the operation of the FOX Studios lot for third parties and the consolidation of Bento Box Entertainment, LLC (“Bento Box”) and Credible.

Operating expenses increased 10% and 6% for the three and six months ended December 31, 2019, respectively, as compared to the corresponding periods of fiscal ~~2018, primarily due to higher advertising and affiliate fee revenues. The increase in advertising revenue was primarily due to the broadcast of National Football League (“NFL”)~~ ~~Thursday Night Football~~ (“TNF”) on the FOX Network and higher political advertising revenue due to the U.S. midterm elections at the FOX Television Stations Group. The increase in affiliate fee revenue was primarily attributable to higher average rates per subscriber across all networks, led by contractual rate increases on existing affiliate agreements and from affiliate agreement renewals.

~~Operating expenses increased 20% and 19% for the three and six months ended December 31, 2018, respectively, as compared to the corresponding periods of fiscal 2018,~~ 2019, primarily due to higher sports programming rights amortization and production costs, including ~~the addition of TNF, partially offset by lower~~contractual rate increases for National Football League (“NFL”) and college football content, increased entertainment programming rights amortization, the consolidation of Bento Box and Credible and higher broadcast costs related to operating as a ~~result~~standalone public company. Partially offsetting the increase in operating expenses for the six months ended December 31, 2019 was the effect of ~~the mix~~fewer broadcasts of ~~programming in the current year as compared to the prior year at the Television Segment.~~FIFA World Cup events.

Selling, general and administrative expenses increased 6%31% and ~~10%~~25% for the three and six months ended December 31, 2019, respectively, as compared to the corresponding periods of fiscal 2019, primarily due to higher costs in fiscal 2020 related to operating as a standalone public company as compared to allocated costs in fiscal 2019 (See Note 1—Description of Business and Basis of Presentation to the accompanying Unaudited Consolidated and Combined Financial Statements of FOX under the heading “Basis of Presentation” for additional information). In addition, the three and six months ended December 31, 2019 include equity-based compensation costs of approximately $15 million and $30 million, respectively, related to the grant of restricted stock units and stock options, in connection with the Distribution, under the Fox Corporation 2019 Shareholder Alignment Plan (See Note 11—Equity-Based Compensation in the 2019 Form 10-K for additional information).

Interest expense—Interest expense increased $75 million and $149 million for the three and six months ended December 31, 2019, respectively, as compared to the corresponding periods of fiscal 2019, primarily due to the issuance of $6.8 billion of senior notes in January 2019 (See Note 9—Borrowings in the 2019 Form 10-K under the heading “Senior Notes Issued Under the January 2019 Indenture” for additional information).

Interest income—Interest income increased $8 million and $25 million for the three and six months ended December 31, 2019, respectively, as compared to the corresponding periods of fiscal 2019, primarily due to a higher average cash balance.

Other, net—See Note 14—Additional Financial Information to the accompanying Unaudited Consolidated and Combined Financial Statements of FOX under the heading “Other, net.”

Income tax expense—The Company’s tax provision and related effective tax rate of 25% and 26% for the three and six months ended December 31, 2019, respectively, were higher than the statutory rate of 21% primarily due to state taxes and other permanent items.

The Company’s tax provision and related effective tax rate of 23% and 26% for the three and six months ended December 31, 2018, respectively, as compared to corresponding periods of fiscal 2018, primarily due to the increase in revenues which is used to allocate on a pro rata basis certain general corporate expenses from 21CF. The corporate allocations recorded to Selling, general and administrative expenses increased approximately $15 million and $40 million for the three and six months ended December 31, 2018, respectively, as compared to the corresponding periods of fiscal 2018 (See Note 8 – ~~Related Party Transactions and 21CF Investment~~ ~~to the accompanying Unaudited Combined Financial Statements of FOX under the heading “Corporate Allocations and 21CF Investment” for additional information).~~

~~Interest expense~~ – Interest expense increased $9 million and $18 million for the three and six months ended December 31, 2018, respectively, as compared to the corresponding periods of fiscal 2018, primarily due to a bridge commitment letter which was entered into during fiscal 2018 (see Note1– ~~Description of Business and~~ ~~Basis~~of~~Presentation to the audited combined financial statements in the Form 10 for additional information).~~

~~Other, net~~ ~~– See Note 12 – Additional Financial Information to the accompanying Unaudited Combined Financial Statements of FOX under the heading “Other, net.”~~

~~Income tax (expense) benefit~~ ~~– The Company’s tax provision and related effective tax rate of 26% for the six months ended December 31, 2018 was~~were higher than the statutory rate of 21% primarily due to state ~~taxes.~~taxes and other permanent items.

~~The~~ ~~Company’seffective~~ Net income—Net income ~~tax rate~~increased $290 million and $188 million for the three and six months ended December 31, ~~2017 included a provisional $624 million tax benefit as a result of the~~ T~~ax Cuts and Jobs Act (the “Tax Act”)~~ ~~(as described in Note 1 –~~ ~~Description of Business and~~ ~~Basis of Presentation to the accompanying Unaudited Combined Financial Statements of FOX under the heading “U.S.~~ Tax ~~Reform”).~~

~~Net income~~ ~~– Net income decreased 97% and 50% for the three and six months ended December 31, 2018,~~2019, respectively, as compared to the corresponding periods of fiscal ~~2018,~~2019, primarily due to ~~the absence of an income tax benefit resulting from the Tax Act in the prior year (as described above), higher costs~~ unrealized gains related to changes in fair value of the ~~Separation and Distribution and~~Company’s investments in equity securities in fiscal 2020 as compared to unrealized losses ~~on investments~~in fiscal 2019 (See Note ~~12 –~~ 14—Additional Financial Information to the accompanying Unaudited Consolidated and Combined Financial Statements of FOX under the heading “Other, net”)~~. Improved operating results~~ and higher revenues, partially offset by increased operating expenses at the ~~decreases in net income for the six months ended December 31, 2018.~~Television segment as well as higher selling, general and administrative and interest expenses.

Segment Analysis

The following tables set forth the Company’s Revenues and Segment EBITDA for the three and six months ended December 31, 2019, 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 %)
Revenues
Cable Network Programming	$	1,469	$	1,434	$	35		2	%	$	2,754	$	2,699		$	55		2	%
Television		2,266		2,149		117		5	%		3,622		3,426			196		6	%
Other, Corporate and Eliminations		43		-		43	**				69		(1	)		70	**

Total revenues	$	3,778	$	3,583	$	195		5	%	$	6,445	$	6,124		$	321		5	%

^**	not meaningful

	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 %)
Segment EBITDA
Cable Network Programming	$	556		$	519		$	37			7		%	$	1,240		$	1,152		$	88			8		%
Television		(214	)		(14	)		(200	)	**					37			157			(120	)		(76	)	%
Other, Corporate and Eliminations		(81	)		(60	)		(21	)		35		%		(160	)		(103	)		(57	)		55		%

Adjusted EBITDA^(a)	$	261		$	445		$	(184	)		(41	)	%	$	1,117		$	1,206		$	(89	)		(7	)	%

^**	not meaningful

^(a)	For a discussion of Adjusted EBITDA and a reconciliation of Net income to Adjusted EBITDA, see “Non-GAAP Financial Measures” below.

Cable Network Programming (43% and 44% of the Company’srevenues forthe firstsix months offiscal 2020 and 2019, 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 %)
Revenues
Affiliate fee	$	957		$	938		$	19			2		%	$	1,896		$	1,877		$	19			1		%
Advertising		337			353			(16	)		(5	)	%		591			617			(26	)		(4	)	%
Other		175			143			32			22		%		267			205			62			30		%

Total revenues		1,469			1,434			35			2		%		2,754			2,699			55			2		%
Operating expenses		(792	)		(808	)		16			(2	)	%		(1,312	)		(1,349	)		37			(3	)	%
Selling, general and administrative		(126	)		(116	)		(10	)		9		%		(216	)		(217	)		1			-		%
Amortization of cable distribution investments		5			9			(4	)		(44	)	%		14			19			(5	)		(26	)	%

Segment EBITDA	$	556		$	519		$	37			7		%	$	1,240		$	1,152		$	88			8		%

Revenues at the Cable Network Programming segment increased 2% for the three and six months ended December 31, 2019, as compared to the corresponding periods of fiscal 2019. The increase in affiliate fee revenue was primarily attributable to higher average rates per subscriber, led by contractual rate increases on existing affiliate agreements and from affiliate agreement renewals, partially offset by the impact of a lower average number of subscribers. The decrease in the average number of subscribers was due to a reduction in subscribers to traditional MVPDs, partially offset by an increase in digital MVPD subscribers. The decrease in advertising revenue was primarily due to lower linear advertising revenue, including the effect of higher preemptions associated with breaking news coverage, the absence of Ultimate Fighting Championship (“UFC”) content and lower college football ratings. Partially offsetting the decrease in advertising revenue were higher digital advertising revenue and increased pricing and a higher number of MLB postseason commercial units. Also contributing to the decrease in advertising revenue for the six months ended December 31, 2019 was the effect of fewer broadcasts of FIFA World Cup events. The increase in other revenues was primarily attributable to

higher sports sublicensing revenue and the revenues generated from Premier Boxing Champions (“PBC”) pay-per-view events.

Cable Network Programming Segment EBITDA increased 7% and 8% for the three and six months ended December 31, 2019, respectively, as compared to the corresponding periods of fiscal 2019, primarily due to the revenue increases noted above and lower expenses. Operating expenses decreased for the three and six months ended December 31, 2019 primarily due to lower sports programming rights amortization partially offset by higher costs at FOX News Media, including talent costs and costs incurred in connection with FOX Nation. Sports programming rights amortization decreased primarily due to the absence of UFC content, partially offset by contractual rate increases for college football and PBC content. Also contributing to the decrease in operating expenses for the six months ended December 31, 2019 was the effect of fewer broadcasts of FIFA World Cup events.

Television (56% of the Company’srevenues forthe first six months offiscal 2020 and2019)

	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 %)
Revenues
Advertising	$	1,673		$	1,634		$	39			2	%	$	2,460		$	2,433		$	27			1		%
Affiliate fee		479			407			72			18	%		934			805			129			16		%
Other		114			108			6			6	%		228			188			40			21		%

Total revenues		2,266			2,149			117			5	%		3,622			3,426			196			6		%
Operating expenses		(2,284	)		(2,010	)		(274	)		14	%		(3,227	)		(2,961	)		(266	)		9		%
Selling, general and administrative		(196	)		(153	)		(43	)		28	%		(358	)		(308	)		(50	)		16		%

Segment EBITDA	$	(214	)	$	(14	)	$	(200	)	**			$	37		$	157		$	(120	)		(76	)	%

^**	not meaningful

Revenues at the Television segment increased 5% and 6% for the three and six months ended December 31, 2019, respectively, as compared to the corresponding periods of fiscal 2019. The increase in advertising revenue was primarily due to higher pricing for linear advertising at the FOX Network, two additional broadcasts of MLB World Series games, a higher number of broadcasts of college football regular season games on the FOX Network and increased digital advertising revenue. Partially offsetting the increase in advertising revenue were lower political advertising revenue at the FOX Television Stations due to the U.S. midterm elections in November 2018 and, for the six months ended December 31, 2019, fewer broadcasts of FIFA World Cup events. The increase in affiliate fee revenue was primarily due to higher fees received from television stations that are affiliated with the FOX Network and higher average rates per subscriber at the Company’s owned and operated television stations, partially offset by a lower average number of subscribers at the Company’s owned and operated television stations. The increase in other revenues was primarily due to the consolidation of Bento Box. Partially offsetting the increase in other revenues for the three months ended December 31, 2019 was lower digital content licensing revenue at the FOX Network.

Television Segment EBITDA decreased for the three and six months ended December 31, 2019, respectively, as compared to the corresponding periods of fiscal 2019, as the revenue increases noted above were more than offset by higher expenses. Operating expenses increased primarily due to higher sports programming rights amortization and production costs, including contractual rate increases for NFL and college football content and the addition of WWE Friday Night SmackDown, and higher entertainment programming rights amortization, including investments in original scripted programming and co-production arrangements with third party studios, and the consolidation of Bento Box. Partially offsetting the increase in operating expenses for the six months ended December 31, 2019 was the effect of fewer broadcasts of FIFA World Cup events. Selling, general and administrative expenses increased primarily due to higher costs related to operating as a standalone public company.

Other, Corporate and Eliminations (1% of the Company’srevenues forthe first six months offiscal 2020)

	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 %)
Revenues	$	43		$	-		$	43		**			$	69		$	(1	)	$	70		**
Operating expenses		(15	)		-			(15	)	**				(20	)		1			(21	)	**
Selling, general and administrative		(109	)		(60	)		(49	)		82	%		(209	)		(103	)		(106	)	**

Segment EBITDA	$	(81	)	$	(60	)	$	(21	)		35	%	$	(160	)	$	(103	)	$	(57	)		55	%

^**	not meaningful

Revenues at the Other, Corporate and Eliminations segment for the three and six months ended December 31, 2019 include revenues generated from the operation of the FOX Studios lot for third parties and the consolidation of Credible. Operating expenses for the three and six months ended December 31, 2019 include the costs of operating the FOX Studios lot for third parties and the consolidation of Credible. Selling, general and administrative expenses increased due to higher costs related to operating as a standalone public company, the costs of operating the FOX Studioslot for third parties and the consolidation of Credible.

Non-GAAP Financial Measures

Beginning with the announcement of the Company’s financial results for the first quarter of fiscal 2020, the Company has renamed as “Adjusted EBITDA” the measure that it had previously referred to as “Total Segment EBITDA” and, prior to the announcement of the Company’s financial results for the third quarter of fiscal 2019, as “Total Segment OIBDA.” The definition of this measure has not changed: Adjusted EBITDA is defined as Revenues less Operating expenses and Selling, general and administrative expenses. Adjusted EBITDA does not include: Amortization of cable distribution investments, Depreciation and amortization, Impairment and restructuring charges, Interest expense, Interest income, Other, net and Income tax expense.

Management believes that information about ~~Total Segment OIBDA~~Adjusted EBITDA assists all users of the Company’s Unaudited Consolidated and Combined Financial Statements by allowing them to evaluate changes in the operating results of the Company’s portfolio of businesses separate from non-operational factors that affect ~~net~~Net income, thus providing insight into both operations and the other factors that affect reported results. ~~Total Segment OIBDA~~Adjusted EBITDA provides management, investors and equity analysts a measure to analyze the operating performance of the Company’s business and its enterprise value against historical data and competitors’ data, although historical results, including ~~Segment OIBDA and Total Segment OIBDA,~~Adjusted EBITDA, may not be indicative of future results (as operating performance is highly contingent on many factors, including customer tastes and preferences).

~~Total Segment OIBDA may be~~Adjusted EBITDA is considered a non-GAAP financial measure and should be considered in addition to, not as a substitute for, net income, cash flow and other measures of financial performance reported in accordance with ~~GAAP.~~U.S. generally accepted accounting principles (“GAAP”). In addition, this measure does not reflect cash available to fund requirements and excludes items, such as depreciation and amortization and impairment charges, which are significant components in assessing the Company’s financial performance. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

The following table reconciles ~~Income before~~Net income ~~tax (expense) benefit~~ to ~~Total Segment OIBDA~~Adjusted EBITDA for the three and six months ended December 31, ~~2018,~~2019, as compared to the three and six months ended December 31, ~~2017:~~2018:

	For the three months ended December 31,											For the six months ended December 31,											For the three months ended December 31,												For the six months ended December 31,
	2018		2017		Change			% Change				2018		2017		Change			% Change				2019			2018		Change			% Change				2019			2018		Change			% Change
	(in millions, except %)																						(in millions, except %)
Income before income tax (expense) benefit	$	31	$	312	$	(281	)		(90	)	%	$	862	$	923	$	(61	)		(7	)	%
Net income																							$	314		$	24	$	290		**				$	827		$	639	$	188			29		%
Add
Amortization of cable distribution investments		9		20		(11	)		(55	)	%		19		32		(13	)		(41	)	%		5			9		(4	)		(44	)	%		14			19		(5	)		(26	)	%
Depreciation and amortization		51		42		9			21		%		94		83		11			13		%		57			51		6			12		%		107			94		13			14		%
Impairment and restructuring charges																								-			-		-			-		%		9			-		9		**
Interest expense		15		6		9		**					31		13		18		**					90			15		75		**					180			31		149		**
Interest income																								(8	)		-		(8	)	**					(25	)		-		(25	)	**
Other, net		339		93		246		**					200		95		105		**					(302	)		339		(641	)	**					(287	)		200		(487	)	**
Income tax expense																								105			7		98		**					292			223		69			31		%

Total Segment OIBDA	$	445	$	473	$	(28	)		(6	)	%	$	1,206	$	1,146	$	60			5		%
Adjusted EBITDA																							$	261		$	445	$	(184	)		(41	)	%	$	1,117		$	1,206	$	(89	)		(7	)	%

^**	not meaningful

The following table sets forth the computation of ~~Total Segment OIBDA~~Adjusted EBITDA for the three and six months ended December 31, ~~2018,~~2019, as compared to the three and six months ended December 31, ~~2017:~~2018:

	For the three months ended December 31,													For the six months ended December 31,													For the three months ended December 31,													For the six months ended December 31,
	2018			2017			Change			% Change				2018			2017			Change			% Change				2019			2018			Change			% Change				2019			2018			Change			% Change
	(in millions, except %)																										(in millions, except %)
Revenues	$	3,583		$	3,108		$	475			15		%	$	6,124		$	5,296		$	828			16		%	$	3,778		$	3,583		$	195			5		%	$	6,445		$	6,124		$	321			5		%
Operating expenses		(2,818	)		(2,346	)		(472	)		20		%		(4,309	)		(3,610	)		(699	)		19		%		(3,091	)		(2,818	)		(273	)		10		%		(4,559	)		(4,309	)		(250	)		6		%
Selling, general and administrative		(329	)		(309	)		(20	)		6		%		(628	)		(572	)		(56	)		10		%		(431	)		(329	)		(102	)		31		%		(783	)		(628	)		(155	)		25		%
Amortization of cable distribution investments		9			20			(11	)		(55	)	%		19			32			(13	)		(41	)	%		5			9			(4	)		(44	)	%		14			19			(5	)		(26	)	%

Total Segment OIBDA	$	445		$	473		$	(28	)		(6	)	%	$	1,206		$	1,146		$	60			5		%
Adjusted EBITDA																											$	261		$	445		$	(184	)		(41	)	%	$	1,117		$	1,206		$	(89	)		(7	)	%

~~The following tables set forth the Company’s Revenues and Segment OIBDA for the three and six months ended December 31, 2018, as compared to the three and six months ended December 31, 2017:~~

For the three months ended December 31,

For the six months ended December 31,

2018

2017

Change

% Change

2018

2017

Change

% Change

(in millions, except %)
Revenues

Cable Network Programming

$
1,434

$
1,315

$
119

9

%

$
2,699

$
2,453

$
246

10

%

Television

2,149

1,793

356

20

%

3,426

2,844

582

20

%

Other, Corporate and Eliminations

-

-

-

-

%

(1
)

(1
)

-

-

%

Total revenues

$
3,583

$
3,108

$
475

15

%

$
6,124

$
5,296

$
828

16

%

For the three months ended December 31,

For the six months ended December 31,

2018

2017

Change

% Change

2018

2017

Change

% Change

(in millions, except %)
Segment OIBDA

Cable Network Programming

$
519

$
462

$
57

12

%

$
1,152

$
1,038

$
114

11

%

Television

(14
)

62

(76
)

**

157

187

(30
)

(16
)
%

Other, Corporate and Eliminations

(60
)

(51
)

(9
)

(18
)
%

(103
)

(79
)

(24
)

(30
)
%

Total Segment OIBDA

$
445

$
473

$
(28
)

(6
)
%

$
1,206

$
1,146

$
60

5

%

**	~~not meaningful~~

~~Cable Network Programming~~ ~~(44% and 46% of the Company’s combined revenues in the first six months of fiscal 2019 and 2018, respectively.)~~

For the three months ended December 31,

For the six months ended December 31,

2018

2017

Change

% Change

2018

2017

Change

% Change

(in millions, except %)
Revenues

Affiliate fee

$
938

$
848

$
90

11

%

$
1,877

$
1,678

$
199

12

%

Advertising and other

496

467

29

6

%

822

775

47

6

%

Total revenues

1,434

1,315

119

9

%

2,699

2,453

246

10

%

Operating expenses

(808
)

(775
)

(33
)

4

%
��

(1,349
)

(1,255
)

(94
)

7

%

Selling, general and administrative

(116
)

(98
)

(18
)

18

%

(217
)

(192
)

(25
)

13

%

Amortization of cable distribution investments

9

20

(11
)

(55
)
%

19

32

(13
)

(41
)
%

Segment OIBDA

$
519

$
462

$
57

12

%

$
1,152

$
1,038

$
114

11

%

Revenues at the Cable Network Programming segment increased for the three and six months ended December 31, 2018, as compared to the corresponding periods of fiscal 2018, primarily due to higher affiliate fee and advertising and other revenues. The increase in affiliate fee revenue was primarily attributable to higher average rates per subscriber across all networks, led by contractual rate increases on existing affiliate agreements and from affiliate agreement renewals. The average number of subscribers remained relatively consistent for the three and six months ended December 31, 2018, as compared to the corresponding periods of fiscal 2018. The increase in advertising and other revenues was primarily due to advertising revenue resulting from higher pricing at the news channels.

Cable Network Programming Segment OIBDA increased for the three and six months ended December 31, 2018, as compared to the corresponding periods of fiscal 2018, primarily due to the revenue increases noted above partially offset by higher expenses. Operating expenses increased principally due to higher sports programming rights amortization and production costs, including Major League Baseball (“MLB”) costs at FS1, launch costs incurred for the Company’s direct-to-consumer initiatives and higher costs related to news coverage associated with the U.S. midterm elections. ~~Also contributing to the increase for the six months ended December 31, 2018 was the addition of the~~ ~~Fédération Internationale de Football Association~~ ~~(“FIFA”)~~ ~~World Cup~~ ~~and Big Ten programming costs~~ ~~at FS1.~~

~~Television~~ ~~(56% and 54% of the Company’s combined revenues for the first six months of fiscal 2019 and 2018, respectively)~~

For the three months ended December 31,

For the six months ended December 31,

2018

2017

Change

% Change

2018

2017

Change

% Change

(in millions, except %)
Revenues

Advertising

$
1,634

$
1,411

$
223

16

%

$
2,433

$
2,061

$
372

18

%

Affiliate fee and other

515

382

133

35

%

993

783

210

27

%

Total revenues

2,149

1,793

356

20

%

3,426

2,844

582

20

%

Operating expenses

(2,010
)

(1,571
)

(439
)

28

%

(2,961
)

(2,356
)

(605
)

26

%

Selling, general and administrative

(153
)

(160
)

7

(4
)
%

(308
)

(301
)

(7
)

2

%

Segment OIBDA

$
(14
)

$
62

$
(76
)

**

$
157

$
187

$
(30
)

(16
)
%

^**	~~not meaningful~~

Revenues at the Television segment increased for the three and six months ended December 31, 2018, as compared to the corresponding periods of fiscal 2018, primarily due to higher advertising, affiliate fee and other revenues. The increase in advertising revenue was primarily due to the broadcast of more NFL games due to the addition of TNF and higher political advertising revenue due to the U.S. midterm elections, partially offset by two fewer broadcasts of MLB ~~World Series~~ ~~games in the current year. Also contributing to the increase in advertising revenue for the six months ended December 31, 2018 was the broadcast of a portion of the FIFA~~ ~~World Cup~~ matches in the current year. Affiliate fee revenue increased 25% and 24% for the three and six months ended December 31, 2018, respectively, as compared to the corresponding periods of fiscal 2018, primarily due to contractual rate increases on existing affiliate agreements and from affiliate agreement renewals. Other revenue increased 93% and 42% for the three and six months ended December

~~31, 2018, respectively, as compared to the corresponding periods of fiscal 2018, primarily due to higher SVOD revenue at the FOX Network.~~

Television Segment OIBDA decreased for the three and six months ended December 31, 2018, as compared to the corresponding periods of fiscal 2018, as the revenue increases noted above were more than offset by higher expenses. Operating expenses increased primarily due to higher sports programming rights amortization and production costs, including TNF, partially offset by lower entertainment programming rights amortization as a result of the mix of programming in the current year as compared to the prior year. Also contributing to the increase in operating expenses for the six months ended December 31, 2018 was the addition of the FIFA ~~World Cup~~.

LIQUIDITY AND CAPITAL RESOURCES

Current Financial Condition

Historically, 21CF provided capital, cash management and other treasury services to the Company and 21CF will continue to provide treasury services to the Company until the Distribution. Prior to December 31, 2017, substantially all of the cash balances were swept to 21CF on a daily basis and the Company received capital from 21CF for the Company’s cash needs. Effective January 1, 2018, the Company ceased participating in 21CF’s capital and cash management accounts. The Company’s combined Total assets as of December 31, 2018 and June 30, 2018 included $2.0 billion and $2.5 billion, respectively, in Cash and cash equivalents, which reflects $600 million, which was contributed by 21CF in accordance with the 21CF Disney Merger Agreement, plus all net cash generated beginning January 1, 2018 by the Company’s business and assets. In accordance with the Separation Agreement, at the time of the Separation and Distribution, the Company will be entitled to such cash amounts reduced by (i) applicable operational taxes, (ii) 30% of all cash dividends declared by 21CF from December 13, 2017 through the Distribution, (iii) 30% of all unallocated shared overhead and corporate costs from December 13, 2017 through the Distribution, (iv) an allocated amount of shared overhead corporate costs consistent with 21CF’s historical approach to such allocation, and (v) certain other expenses related to the Separation and Distribution. The obligations described in clauses (i) - (v) are not fully reflected in the $2.0 billion and $2.5 billion in Cash and cash equivalents as of December 31, 2018 and June 30, 2018, respectively. The remaining amount of these contractual obligations was approximately $800 million in the aggregate, which was settled in March 2019.

The Company’s principal source of liquidity is internally generated funds which are highly dependent upon the continuation of affiliate agreements and the state of the advertising markets. ~~In January 2019, the Company issued approximately $6.8 billion of senior notes. In addition, the~~The Company has an unused five-year $1.0 billion unsecured revolving credit facility ~~an unused $1.7 billion 364-Day Bridge Term Loan Agreement~~(See Note 6—Borrowings to the accompanying Unaudited Consolidated and Combined Financial Statements of FOX) and has access to the worldwide capital markets, subject to market conditions. ~~(See Note 5 - Borrowings to~~ As of December 31, 2019, the ~~accompanying Unaudited Combined Financial Statements~~Company was in compliance with all of ~~FOX).~~the covenants under the revolving credit facility, and it does not anticipate any noncompliance with such covenants.

The principal uses of cash that affect the Company’s liquidity position include the following: ~~the payment of the Dividend,~~ the acquisition of rights and related payments for entertainment and sports programming; operational expenditures including marketing and promotional expenses; expenses related to ~~operating~~broadcasting the ~~technical facilities of the cable network and broadcaster and~~Company’s programming along with investing approximately $150 million to $200 million in establishing ~~stand-alone~~standalone technical ~~facilities;~~facilities over the two years following the Distribution; employee and facility costs; capital expenditures; acquisitions; ~~and~~ interest and dividend ~~payments.~~payments; debt repayments; and stock repurchases.

In addition to the acquisitions, sales and possible acquisitions disclosed elsewhere, the Company has evaluated, and expects to continue to evaluate, possible acquisitions and dispositions of certain businesses and assets. Such transactions may be material and may involve cash, the Company’s securities or the assumption of additional indebtedness. See Note 2—Acquisitions, Disposals and Other Transactions to the accompanying Unaudited Consolidated and Combined Financial Statements of FOX.

Sources and Uses of Cash

Net cash (used in) provided by ~~(used in)~~ operating activities for the six months ended December 31, ~~2018~~2019 and ~~2017~~2018 was as follows (in millions):

For the six months ended December 31,

2018

2017

Net cash provided by (used in) operating activities

$
36

$
(35
)

The change in net cash provided by (used in) operating activities during the six months ended December 31, 2018, as compared to the corresponding period of fiscal 2018, is primarily due to higher cash receipts from political advertising revenue due to the U.S. midterm elections at the FOX Television Stations Group.

~~Net cash (used in) provided by investing activities for the six months ended December 31, 2018 and 2017 was as follows (in millions):~~

For the six months ended December 31,	2018			2017		2019			2018
Net cash (used in) provided by investing activities	$	(251	)	$	239
Net cash (used in) provided by operating activities						$	(256	)	$	36

The change in net cash (used in) provided by operating activities during the six months ended December 31, 2019, as compared to the corresponding period of fiscal 2019, was primarily due to higher seasonal cash payments for sports programming rights at the Television segment and increased cash paid for interest as a result of the senior notes issued in January 2019.

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

For the six months ended December 31,		2019				2018
Net cash used in investing activities		$	(349	)		$	(251	)

The increase in net cash used in investing activities during the six months ended December 31, ~~2018,~~2019, as compared to the corresponding period of fiscal ~~2018,~~2019, was primarily due to the ~~absence of cash received from the Federal Communications Commission’s completed reverse auction for broadcast spectrum and~~Credible Acquisition in October 2019 as compared to the investments in Caffeine, Inc. and Caffeine Studio, LLC in the first quarter of fiscal 2019 (See Note ~~2 -~~ 2—Acquisitions, Disposals and Other Transactions to the accompanying Unaudited Consolidated and Combined Financial Statements of FOX).

Net cash used in financing activities for the six months ended December 31, ~~2018~~2019 and ~~2017~~2018 was as follows (in millions):

For the six months ended December 31,		2018				2017				2019				2018
Net cash used in financing activities		$	(334	)		$	(167	)		$	(638	)		$	(334	)

The increase in net cash used in financing activities during the six months ended December 31, ~~2018,~~2019, as compared to the corresponding period of fiscal ~~2018,~~2019, was primarily due to repurchases of shares of the Company’s Common Stock and dividends paid to the Company’s stockholders during the six months ended December 31, 2019 as compared to the net transfers to ~~21CF~~Twenty-First Century Fox, Inc. of $312 million in the six months ended December 31, ~~2018 as compared to net transfers to 21CF of $130 million in the six months ended December 31, 2017.~~ 2018. The nature of activities included in net transfers to ~~21CF~~Twenty-First Century Fox, Inc. includes financing activities, capital transfers, cash sweeps, other treasury services and corporate expenses. ~~Prior~~

Stock Repurchase Program

See Note 8—Stockholders’ Equity to the accompanying Unaudited Consolidated and Combined Financial Statements of FOX under the heading “Stock Repurchase Program.”

Dividends

Subsequent to December 31, ~~2017,~~2019, the ~~majority~~Company declared a semi-annual dividend of $0.23 per share on both the ~~cash balances were swept to 21CF on a daily basis~~Class A Common Stock and the ~~Company received capital from 21CF~~Class B Common Stock. The dividend declared is payable on April 1, 2020 with a record date for ~~the Company’s cash needs. Effective January 1, 2018, the Company ceased participating in 21CF’s capital and cash management accounts.~~determining dividend entitlements of March 4, 2020.

Debt Instruments

~~In January 2019, the Company issued approximately $6.8 billion of~~Borrowings include senior notes (See Note ~~5 -~~ 9—Borrowings in the 2019 Form 10-K under the heading “Senior Notes Issued Under the January 2019 Indenture”).

Ratings of the senior notes

The following table summarizes the Company’s credit ratings as of December 31, 2019:

Rating Agency	Senior Debt	Outlook
Moody's	Baa2	Stable
Standard & Poor's	BBB	Stable

Revolving Credit Agreement

The Company has an unused five-year $1.0 billion unsecured revolving credit facility (See Note 6—Borrowings to the accompanying Unaudited ~~Combined Financial Statements of FOX).~~

~~Revolving Credit Agreement~~

In March 2019, the Company entered into an unsecured $1.0 billion revolving credit facility with a maturity date of March 2024 (See Note 5 – Borrowings to the accompanying Unaudited Combined Financial Statements of FOX).

~~Bridge Credit Agreement~~

~~In March 2019, the Company entered into an unsecured $1.7 billion 364-Day Bridge Term Loan Agreement (See Note 5 – Borrowings to the accompanying Unaudited~~Consolidated and Combined Financial Statements of FOX).

Commitments ~~Contingent Guarantees~~ and Contingencies

See Note ~~9 -~~ 11—Commitments and Contingencies to the accompanying Unaudited Consolidated and Combined Financial Statements of FOX.

Recent Accounting Pronouncements

See Note ~~1 -~~ 1—Description of Business and Basis of Presentation to the accompanying Unaudited Consolidated and Combined Financial Statements of FOX under the heading “Recently Adopted and Recently Issued Accounting ~~Guidance and U.S. Tax Reform.~~Guidance.”

Caution Concerning Forward-Looking Statements

This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical or current fact are “forward-looking statements” for purposes of federal and state securities laws, including any statements regarding (i) future earnings, revenues or other measures of the Company’s financial performance; (ii) the Company’s plans, strategies and objectives for future operations; (iii) proposed new programming or other offerings; (iv) future economic conditions or performance; (v) estimated annual recurring costs relating to FOX operating as a standalone, publicly traded company; and ~~(v)~~(vi) assumptions underlying any of the foregoing.

Forward-looking statements may include, among others, the words “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook” or any other similar words.

Although the Company’s management believes that the expectations reflected in any of the Company’s forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any forward-looking statements. The Company’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the SEC. Important factors that could cause the Company’s actual results, performance and achievements to differ materially from those estimates or projections contained in the Company’s forward-looking statements include, but are not limited to, government regulation, economic, strategic, political and social conditions and the following factors:

recent and future changes in technology, including alternative methods for the delivery and storage of digital content, and in consumer behavior, including changes in when, where and how they consume content;

•

changes in the Company’s strategies and initiatives and the acceptance thereof by consumers, distributors of the Company’s content, affiliates, advertisers and other parties with which the Company does business;

•

~~the highly competitive nature of the industry in which the Company’s businesses operate;~~

•

the highly competitive nature of the industry in which the Company’s businesses operate;

declines in advertising expenditures due to various factors such as the economic prospects of advertisers or the economy in general, technological developments and changes in consumer behavior, and shifts in advertisers’ spending toward digital and mobile offerings and away from more traditional media;

•

~~the loss of affiliate or carriage agreements or arrangements where the Company makes its content available for viewing through online video platforms;~~

•

the loss of affiliation or carriage agreements or arrangements where the Company makes its content available for viewing through online video platforms;

the popularity of the Company’s content, including special sports events, and the continued popularity of the sports franchises, leagues and teams for which the Company has acquired programming rights;

~~the Company’s ability to renew programming rights, particularly sports programming rights, on sufficiently favorable terms;~~

~~damage to the Company’s brands or reputation;~~

~~a degradation, failure or misuse of the Company’s network and information systems and other technology relied on by the Company;~~

~~content piracy and signal theft and the Company’s ability to protect its intellectual property rights;~~

~~the loss of key personnel;~~

~~the effect of labor disputes, including labor disputes involving professional sports leagues whose games or events the Company has the right to broadcast;~~

~~changes in tax, federal communications or other laws, regulations, practices or the interpretations thereof;~~

~~the impact of any investigations or fines from governmental authorities, including FCC rules and policies and FCC decisions regarding revocation, renewal or grant of station licenses;~~

~~the failure or destruction of satellites and transmitter facilities the Company depends on to distribute its programming;~~

~~lower than expected valuations associated with one of the Company’s reporting units, indefinite-lived intangible assets, investments or long-lived assets;~~

~~changes in U.S. GAAP or other applicable accounting standards and policies;~~

~~the Company’s lack of operating history as a standalone, publicly traded company;~~

increased costs in connection with the Company operating as a standalone, publicly traded company following the Distribution and the loss of synergies the Company enjoyed from operating as part of 21CF;

the Company’s reliance on 21CF to provide the Company various services under the transition services agreements, including broadcast operations, sports production, information and technology, and other services, and the risk that 21CF does not properly perform the services under this agreement;

~~the Company’s ability to secure additional capital on acceptable terms;~~

•

the Company’s ability to ~~benefit from any additional annual tax deductions expected~~renew programming rights, particularly sports programming rights, on sufficiently favorable terms;

•

damage to ~~result from~~the Company’s brands or reputation;

•

the inability to realize the anticipated benefits of the Company’s strategic investments and acquisitions;

•

a degradation, failure or misuse of the Company’s network and information systems and other technology relied on by the Company ~~obtaining~~that causes a disruption of services or improper disclosure of personal data or other confidential information;

•

content piracy and signal theft and the Company’s ability to protect its intellectual property rights;

•

the loss of key personnel;

•

the effect of labor disputes, including labor disputes involving professional sports leagues whose games or events the Company has the right to broadcast;

•

changes in tax, federal communications or other laws, regulations, practices or the interpretations thereof;

•

the impact of any investigations or fines from governmental authorities, including FCC rules and policies and FCC decisions regarding revocation, renewal or grant of station licenses, waivers and other matters;

•

the failure or destruction of satellites or transmitter facilities the Company depends on to distribute its programming;

•

lower than expected valuations associated with one of the Company’s reporting units, indefinite-lived intangible assets, investments or long-lived assets;

•

changes in GAAP or other applicable accounting standards and policies;

•

the Company’s very limited operating history as a standalone, publicly traded company and the risk that the Company is unable to make, on a timely or cost-effective basis, the changes necessary to operate effectively as a standalone, publicly traded company;

•

increased costs in ~~its assets equal~~connection with the Company operating as a standalone, publicly traded company following the Distribution and the loss of synergies the Company enjoyed from operating as part of 21CF;

•

the Company’s reliance on 21CF to ~~their respective fair market values~~provide the Company various services during a transition period under the transition services agreement including broadcast operations, sports production, information and technology, and other services, and the risks that 21CF does not properly provide the services under this agreement or that the Company is unable to provide or obtain such services following the transition period (or during the transition period, if 21CF does not properly provide them in a timely and cost effective manner);

•

the Company’s ability to secure additional capital on acceptable terms;

•

the impact of any payments the Company is required to make or liabilities it is required to assume under the Separation Agreement and the indemnification arrangements entered into in connection with the Separation and the Distribution; and

the impact of any payments the Company is required to make or liabilities it is required to assume under the Separation Agreement and any indemnification arrangements entered into in connection with the Separation and Distribution; and

the other risks and uncertainties detailed in Part II., Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q and in the section entitled “Risk Factors” included in the Company’s Information Statement filed as Exhibit 99.1 to the Form 10.

•

the other risks and uncertainties detailed in Part I., Item 1A. “Risk Factors” in the 2019 Form 10-K and in Part II., Item 1A. “Risk Factors” in the Q1 2020 Form 10-Q.

Forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date hereof, and forward-looking statements in documents that are incorporated by reference hereto speak only as of the date of those documents. The Company does not undertake any obligation to update or release any revisions to any forward-looking statement made herein or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or to conform such statements to actual results or changes in our expectations, except as required by law.

ITEM 3.

QUANTITATIVE AND ~~QUALITATIVE~~QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~The Company has exposure to one type of market risk:~~There have been no material changes in ~~stock prices.~~

~~Stock Prices~~

~~The Company has a common stock investment~~the market risks reported in ~~a publicly traded company that is subject to market price volatility. Information on~~ the ~~Company’s investment with exposure to stock price risk is presented below:~~

2019 Form 10-K.

As of
December 31,
2018

As of
June 30,
2018

(in millions)

Fair Value

Total fair value of the common stock investment

$
185

$
257

Sensitivity Analysis

Potential change in fair values resulting from a 10% adverse change in quoted market prices: loss^(a)

$
(19
)

$
(26
)

^(a)

This investment is recorded at fair value each reporting period and, beginning July 1, 2018, any associated unrealized gains and losses are recorded to net income (See Note 1 – Description of Business and Basis of Presentation to the accompanying Unaudited Combined Financial Statements of FOX under the heading “Recently Adopted and Recently Issued Accounting Guidance and U.S. Tax Reform”).

~~Concentrations of Credit Risk~~

~~See Note 4 – Fair Value to the accompanying Unaudited Combined Financial Statements of FOX under the heading “Concentrations of Credit Risk.”~~

ITEM 4.

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 15d-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 that 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)

Changes in Internal Control ~~Over~~over Financial Reporting

There ~~has been~~were no ~~change~~changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company’s second quarter of fiscal ~~2019~~2020 that ~~has~~have materially affected, or isare reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II

ITEM 1.1A.

~~LEGAL PROCEEDINGS~~

~~There have been no material changes to the discussion set forth in the section titled “Legal Proceedings” in the Form 10, except as set forth below.~~

On November 25, 2015, Wark Entertainment, Inc. filed a lawsuit (the “Wark Lawsuit”) against Twentieth Century Fox Film Corporation, Fox Broadcasting Company (the “FOX Network”), and Fox Entertainment Group, Inc. (“Fox Entertainment Group”) in the Superior Court of the State of California, County of Los Angeles, Central District (the “Los Angeles Superior Court”). On November 30, 2015, Temperance Brennan, L.P., Snooker Doodle Productions, Inc., and Bertha Blue, Inc. filed a lawsuit (the “Temperance Brennan Lawsuit”) against Twenty-First Century Fox, Inc. (“21CF”), Fox Entertainment Group, Twentieth Century Fox Film Corporation, and the FOX Network in the Los Angeles Superior Court. The plaintiffs in these cases are profits participants in the television series ~~Bones~~, which was produced by Twentieth Century Fox Television, a unit of Twentieth Century Fox Film Corporation (“TCFTV”), and aired on the FOX Network from 2005 to 2017. TCFTV, 21CF, the FOX Network and Fox Entertainment Group are defendants in one or both of the Wark Lawsuit and the Temperance Brennan Lawsuit (collectively, the “Lawsuits”), which were joined by the Los Angeles Superior Court on December 21, 2015.

The plaintiffs in the Lawsuits alleged, among other things, that TCFTV breached its contracts with the plaintiffs and committed fraud concerning certain of those contracts, and that 21CF, Fox Entertainment Group, and the FOX Network induced TCFTV’s breach of contract and intentionally interfered with the plaintiffs’ contracts with TCFTV. These allegations were based on plaintiffs’ claims that in licensing ~~Bones~~ ~~between affiliated 21CF entities, the defendants agreed to lower license fees for~~ ~~Bones~~ ~~to the detriment of the Plaintiffs (collectively, the “Affiliated Dealing Claims”). The plaintiffs also challenged TCFTV’s accounting practices with regard to~~ ~~Bones, including challenging TCFTV’s distribution and overhead charges for~~ ~~Bones~~ ~~(the “Accounting Claims”). The defendants vigorously disputed the Affiliated Dealing Claims and the Accounting Claims and the related allegations.~~

On April 8, 2016, the Los Angeles Superior Court stayed the Accounting Claims and ordered that the Affiliated Dealing Claims be submitted to arbitration pursuant to the plaintiffs’ contracts. On February 20, 2019, the arbitrator issued a punitive damages award of approximately $129 million against the defendants, including the FOX Network. On February 27, 2019, the defendants filed a motion with the Los Angeles Superior Court to vacate the entire punitive damages award on the ground that the arbitrator did not have authority to award punitive damages, and the plaintiffs filed a petition with the court to confirm the entirety of the arbitrator’s award. A hearing on these matters is scheduled for April 29, 2019. The Company would be responsible for a portion of the arbitrator’s punitive damages award if it were sustained, and the Company intends to vigorously defend against such award.

~~ITEM 1A.~~

RISKRISK FACTORS

There have been no material changes to the risk factors described in the section titled “Risk Factors” ~~previously disclosed~~ in the Company’s Annual Report on Form ~~10.~~10-K (File No. 001-38776), as filed with the Securities and Exchange Commission on August 9, 2019, and the Company’s Quarterly Report on Form 10-Q (File No. 001-38776), as filed with the Securities and Exchange Commission on November 6, 2019.

ITEM 2.

UNREGISTERED SALES OF ~~EQUI~~TYEQUITY SECURITIES AND USE OF PROCEEDS

~~Not applicable~~Below is a summary of the Company’s repurchases of its Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”), and Class B Common Stock, par value $0.01 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”), during the three months ended December 31, 2019:

	Total number of shares purchased^(a)		Average price paid per share^(b)		Approximate dollar value of shares that may yet be purchased under the program^(b)(c)
					(in millions)
October 1, 2019 – October 31, 2019
Class A common stock		-	$	-
Class B common stock		-		-
November 1, 2019 – November 30, 2019
Class A common stock^(d)		8,002,286		-
Class B common stock		269,097		34.97
December 1, 2019 – December 31, 2019
Class A common stock		-		-
Class B common stock		1,891,358		35.73

Total
Class A common stock^(d)		8,002,286		-
Class B common stock		2,160,455	35.64
		10,162,741			$	1,573

^(a)	The Company has not made any purchases of Common Stock other than in connection with the publicly announced stock repurchase program described below.

^(b)	These amounts exclude any fees, commissions or other costs associated with the share repurchases.

^(c)	On November 6, 2019, the Company announced that its Board of Directors had authorized a stock repurchase program providing for the repurchase of $2 billion of the Company’s Common Stock. The program has no time limit and may be modified, suspended or discontinued at any time.

^(d)

In connection with the stock repurchase program, the Company entered into an accelerated share repurchase (“ASR”) agreement to repurchase $350 million of Class A Common Stock in November 2019. In accordance with the ASR agreement, in November 2019, the Company paid a third-party financial institution $350 million and received an initial delivery of approximately eight million shares of Class A Common Stock, representing 80% of the shares expected to be repurchased under the ASR agreement, at a price of $34.99 per share. Upon settlement of the ASR agreement in January 2020, the Company received a final delivery of approximately two million shares of Class A Common Stock. The final number of shares purchased under the ASR agreement was determined using a price of $36.05 per share (the volume-weighted average market price of the Class A Common Stock during the term of the ASR agreement less a discount) (See Note 8—Stockholders’ Equity to the accompanying Unaudited Consolidated and Combined Financial Statements of FOX under the heading “Stock Repurchase Program” for more information).

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable

ITEM 5.

OTHER INFORMATION

Not applicable

ITEM 6.

E~~XHIBITS~~EXHIBITS

(a)

Exhibits.

~~4.1~~3.1		~~Indenture, dated as~~Certificate of ~~January 25, 2019, by and among~~Elimination of Series A Junior Participating Preferred Stock of Fox Corporation ~~Twenty-First Century Fox, Inc., as guarantor, and The Bank of New York Mellon, as trustee~~(the “Registrant”) (incorporated herein by reference to Exhibit ~~4.1~~3.1 to the ~~Company’s Registration Statement~~Registrant’s Current Report on Form ~~10 (File No. 001-38776)~~8-K dated November 20, 2019 and filed with the Securities and Exchange Commission (the “SEC”) on ~~January 25,~~November 20, 2019).

~~4.2~~10.1		~~Form~~Stockholders Agreement, dated as of ~~Notes representing $750,000,000 principal amount of 3.666% Senior Notes due 2022, dated January 25,~~November 6, 2019, by and between the Registrant and the Murdoch Family Trust (incorporated herein by reference to Exhibit ~~4.2~~10.1 to the ~~Company’s Registration Statement~~Registrant’s Current Report on Form ~~10 (File No. 001-38776)~~8-K dated November 5, 2019 and filed with the ~~Securities and Exchange Commission~~SEC on ~~January 25,~~November 6, 2019).

~~4.3~~		Form of Notes representing $1,250,000,000 principal amount of 4.030% Senior Notes due 2024, dated January 25, 2019 (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form 10 (File No. 001-38776) filed with the Securities and Exchange Commission on January 25, 2019).

~~4.4~~		Form of Notes representing $2,000,000,000 principal amount of 4.709% Senior Notes due 2029, dated January 25, 2019 (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form 10 (File No. 001-38776) filed with the Securities and Exchange Commission on January 25, 2019).

~~4.5~~		Form of Notes representing $1,250,000,000 principal amount of 5.476% Senior Notes due 2039, dated January 25, 2019 (incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form 10 (File No. 001-38776) filed with the Securities and Exchange Commission on January 25, 2019).

~~4.6~~		Form of Notes representing $1,550,000,000 principal amount of 5.576% Senior Notes due 2049, dated January 25, 2019 (incorporated by reference to Exhibit 4.6 to the Company’s Registration Statement on Form 10 (File No. 001-38776) filed with the Securities and Exchange Commission on January 25, 2019).

~~4.7~~		Registration Rights Agreement, dated as of January 25, 2019, by and among Fox Corporation and Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Goldman Sachs & Co. LLC (incorporated by reference to Exhibit 4.7 to the Company’s Registration Statement on Form 10 (File No. 001-38776) filed with the Securities and Exchange Commission on January 25, 2019).

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

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.**

101		The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, ~~2018~~2019 formatted in ~~eXtensible~~Inline XBRL (eXtensible Business Reporting ~~Language:~~Language): (i) Unaudited Consolidated and Combined Statements of Operations for the three and six months ended December 31, ~~2018~~2019 and ~~2017;~~2018; (ii) Unaudited Consolidated and Combined Statements of Comprehensive Income for the three and six months ended December 31, ~~2018~~2019 and ~~2017;~~2018; (iii) ~~Combined~~Consolidated Balance Sheets as of December 31, ~~2018~~2019 (unaudited) and June 30, ~~2018~~2019 (audited); (iv) Unaudited Consolidated and Combined Statements of Cash Flows for the six months ended December 31, ~~2018~~2019 and ~~2017;~~2018; (v) Unaudited Consolidated and ~~(v)~~Combined Statements of Equity for the three and six months ended December 31, 2019 and 2018; and (vi) Notes to the Unaudited Consolidated and Combined Financial Statements.*

104		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

*	Filed herewith.

**	Furnished herewith.

~~SIGNATURE~~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.

	Fox Corporation
	(Registrant)

	By:		/s/ Steven Tomsic
			Steven Tomsic
			Chief Financial Officer

Date: ~~March 18, 2019~~February 5, 2020

3639

	For the three months ended December 31, 2018										For the six months ended December 31, 2018
	Total FOX equity				Noncontrolling interests^(a)			Total equity			Total FOX equity			Noncontrolling interests^(a)		Total equity
	(in millions)
Balance, beginning of period	$	11,045			$	9		$	11,054		$	9,594		$	-	$	9,594
Net income		8				6			14			612			6		618
Other comprehensive income		2				-			2			3			-		3
Other		(19	)			(3	)		(22	)		162	⁽^b⁾		6		168
Net (decrease) increase in 21CF investment		(642	)	^(c)		-			(642	)		23	^(c)		-		23
		-
Balance, end of period	$	10,394			$	12		$	10,406		$	10,394		$	12	$	10,406

	For the three months ended December 31, 2017							For the six months ended December 31, 2017
	Before tax		Tax provision			Net of tax		Before tax		Tax provision			Net of tax
	(in millions)
Gains on securities
Unrealized gains	$	154	$	(58	)	$	96	$	283	$	(106	)	$	177

Other comprehensive income	$	154	$	(58	)	$	96	$	283	$	(106	)	$	177

	For the three months ended December 31, 2018									For the six months ended December 31, 2018
	Unrealized holding gains on securities		Benefit plan adjustments and other				Accumulated other comprehensive (loss) income			Unrealized holding gains on securities				Benefit plan adjustments and other				Accumulated other comprehensive (loss) income
	(in millions)
Balance, beginning of period	$	-	$	(61	)		$	(61	)	$	130			$	(49	)		$	81
Adoption of ASUs		-		-				-			(130	)	^(a)		(13	)	^(b)		(143	)
Other comprehensive income, net of tax		-		2				2			-				3				3
Transferred from 21CF investment		-		(143	)	^(c)		(143	)		-				(143	)	^(c)		(143	)

Balance, end of period	$	-	$	(202	)		$	(202	)	$	-			$	(202	)		$	(202	)

Revenues by Component

	For the three months ended December 31,				For the six months ended December 31,
	2018		2017		2018		2017
	(in millions)
Revenues
Affiliate fee	$	1,345	$	1,174	$	2,682	$	2,329
Advertising		1,987		1,732		3,050		2,620
Other		251		202		392		347

Total revenues	$	3,583	$	3,108	$	6,124	$	5,296