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| Class A Common Stock, par value $0.01 per share | FOXA | The Nasdaq Global Select Market | ||||||
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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, 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, 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, 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 2024. As of December 31, 2018 As of June 30, 2018 (in millions) Sports programming rights $ 1,179 $ 983 Entertainment programming rights 398 318 Total inventories, net 1,577 1,301 Less: current portion of inventories, net (1,422 ) (1,180 ) Total non-current inventories, net $ 155 $ 121 Fair value measurements As of December 31, 2018 Total Level 1 Level 3 (in millions) Assets Investments(a) $ 185 $ 185 $ - Redeemable noncontrolling interests (106 ) - (106 ) Total $ 79 $ 185 $ (106 ) As of June 30, 2018 Total Level 1 Level 3 (in millions) Assets Investments(a) $ 257 $ 257 $ - Redeemable noncontrolling interests(b) (275 ) - (275 ) Total $ (18 ) $ 257 $ (275 ) Credible Labs Inc. (“Credible”) and an entertainment production company. For the three months ended December 31, For the six months ended December 31, 2018 2017 2018 2017 (in millions) Beginning of period $ (83 ) $ (172 ) $ (275 ) $ (154 ) Net income (10 ) (13 ) (21 ) (23 ) Distributions 6 9 19 19 Accretion and other (19 ) (19 ) 171 (a) (37 ) - End of period $ (106 ) $ (195 ) $ (106 ) $ (195 ) 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 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 retained earnings. For the three months ended For the six months ended 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 ) For the three months ended December 31, For the six months ended December 31, 2018 2017 2018 2017 (in millions) Equity-based compensation(a) $ 12 $ 15 $ 33 $ 28 Intrinsic value of all settled equity-based awards $ 8 $ - $ 110 $ 31 The Company’s equity-based awards are settled in Class A Common Stock. As of For the three months ended December 31, For the six months ended December 31, 2018 2017 2018 2017 (in millions) Related party revenue $ 107 $ 68 $ 178 $ 132 Related party expense (3 ) (7 ) (34 ) (49 ) Related party revenue, net of expense $ 104 $ 61 $ 144 $ 83 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 tax matters will have a material adverse effect on its a small group covered by collective bargaining agreements. The net periodic benefit cost was •Cable Network Programming, which •Television, which •Other, Corporate and Eliminations, which principally consists of the FOX Studio Lot, Credible, corporate overhead costs and intracompany 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 For the three months ended December 31, For the six months ended December 31, 2018 2017 2018 2017 (in millions) Revenues Cable Network Programming $ 1,434 $ 1,315 $ 2,699 $ 2,453 Television 2,149 1,793 3,426 2,844 Other, Corporate and Eliminations - - (1 ) (1 ) Total revenues $ 3,583 $ 3,108 $ 6,124 $ 5,296 Segment OIBDA Cable Network Programming $ 519 $ 462 $ 1,152 $ 1,038 Television (14 ) 62 157 187 Other, Corporate and Eliminations (60 ) (51 ) (103 ) (79 ) Total Segment OIBDA $ 445 $ 473 $ 1,206 $ 1,146 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 For the three months ended December 31, For the six months ended December 31, 2018 2017 2018 2017 (in millions) Depreciation and amortization Cable Network Programming $ 12 $ 9 $ 23 $ 18 Television 26 28 52 55 Other, Corporate and Eliminations 13 5 19 10 Total depreciation and amortization $ 51 $ 42 $ 94 $ 83 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 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 (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 ) As of December 31, 2018 As of June 30, 2018 (in millions) Investments(a) $ 289 $ 275 Inventories, net 155 121 Other(b) 389 363 Total other non-current assets $ 833 $ 759 As of December 31, 2018 As of June 30, 2018 (in millions) Program rights payable $ 443 $ 380 Accrued expenses 428 530 Deferred revenue 129 147 Income taxes payable(a) 127 553 Other current liabilities 114 149 Total accounts payable, accrued expenses and other current liabilities $ 1,241 $ 1,759 Other Liabilities 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 •Overview of the Company’s Business •Results of Operations •Liquidity and Capital •Other, Corporate and Eliminations, which principally consists of the FOX Studio Lot, Credible Labs Inc. (“Credible”), corporate overhead costs and intracompany September 30, 2022. 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 $ 1,345 $ 1,174 $ 171 15 % $ 2,682 $ 2,329 $ 353 15 % Advertising 1,987 1,732 255 15 % 3,050 2,620 430 16 % Other 251 202 49 24 % 392 347 45 13 % Total revenues 3,583 3,108 475 15 % 6,124 5,296 828 16 % Operating expenses (2,818 ) (2,346 ) (472 ) 20 % (4,309 ) (3,610 ) (699 ) 19 % Selling, general and administrative (329 ) (309 ) (20 ) 6 % (628 ) (572 ) (56 ) 10 % Depreciation and amortization (51 ) (42 ) (9 ) 21 % (94 ) (83 ) (11 ) 13 % Interest expense (15 ) (6 ) (9 ) ** (31 ) (13 ) (18 ) ** Other, net (339 ) (93 ) (246 ) ** (200 ) (95 ) (105 ) ** Income before income tax (expense) benefit 31 312 (281 ) (90 ) % 862 923 (61 ) (7 ) % Income tax (expense) benefit (7 ) 570 (577 ) ** (223 ) 359 (582 ) ** Net income 24 882 (858 ) (97 ) % 639 1,282 (643 ) (50 ) % Less: Net income attributable to noncontrolling interests (16 ) (13 ) (3 ) 23 % (27 ) (23 ) (4 ) 17 % Net income attributable to FOX $ 8 $ 869 $ (861 ) (99 ) % $ 612 $ 1,259 $ (647 ) (51 ) % not meaningful renewals, partially offset by a lower average number of subscribers across all networks. The decrease in advertising revenue was primarily attributable to lower political advertising revenue at the FOX Television Stations principally due to the absence of prior year advertiser expenditures in advance of the November 2022 U.S. midterm elections, lower pricing in the direct response marketplace at FOX News Media and lower ratings at the FOX Network. Partially offsetting this decrease was the broadcast of the Fédération International de Football Association (“FIFA”) Women’s National Football League (“NFL”), and higher expenses associated with FOX’s digital investments. Other, net The following table reconciles 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 %) Income before income tax (expense) benefit $ 31 $ 312 $ (281 ) (90 ) % $ 862 $ 923 $ (61 ) (7 ) % Add Amortization of cable distribution investments 9 20 (11 ) (55 ) % 19 32 (13 ) (41 ) % Depreciation and amortization 51 42 9 21 % 94 83 11 13 % Interest expense 15 6 9 ** 31 13 18 ** Other, net 339 93 246 ** 200 95 105 ** Total Segment OIBDA $ 445 $ 473 $ (28 ) (6 ) % $ 1,206 $ 1,146 $ 60 5 % The following table sets forth the computation of 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 $ 3,583 $ 3,108 $ 475 15 % $ 6,124 $ 5,296 $ 828 16 % Operating expenses (2,818 ) (2,346 ) (472 ) 20 % (4,309 ) (3,610 ) (699 ) 19 % Selling, general and administrative (329 ) (309 ) (20 ) 6 % (628 ) (572 ) (56 ) 10 % Amortization of cable distribution investments 9 20 (11 ) (55 ) % 19 32 (13 ) (41 ) % Total Segment OIBDA $ 445 $ 473 $ (28 ) (6 ) % $ 1,206 $ 1,146 $ 60 5 % 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 % 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 % 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 ) % LIQUIDITY AND CAPITAL RESOURCES senior notes. As of September 30, 2023, the Company was in compliance with all of the covenants under the revolving credit facility, and it does not anticipate any noncompliance with such covenants. For the six months ended December 31, 2018 2017 Net cash provided by (used in) operating activities $ 36 $ (35 ) Net cash For the six months ended December 31, 2018 2017 Net cash (used in) provided by investing activities $ (251 ) $ 239 equity securities. For the six months ended December 31, 2018 2017 Net cash used in financing activities $ (334 ) $ (167 ) September 27, 2023. the Senior Notes 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. •declines in advertising expenditures due to various factors such as the economic prospects of advertisers or the economy, •further declines in the •the popularity of the Company’s content, including special sports •the Company’s ability to renew programming rights, particularly sports programming rights, on sufficiently favorable •damage to the Company’s brands or reputation; •the loss of key personnel; •content piracy and signal theft and the Company’s ability to protect its intellectual property rights; •the •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 •the failure or destruction of satellites •changes in •the Company’s ability to secure additional capital on acceptable terms; •the impact of •the other risks and uncertainties detailed in Part 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 ) 31.2 32.1 101PagePage 52131313233343434343536COMBINEDCONSOLIDATED STATEMENTS OF OPERATIONSMILLIONS)MILLIONS, EXCEPT PER SHARE AMOUNTS) For the three months ended September 30, 2023 2022 Revenues $ 3,207 $ 3,192 Operating expenses (1,862) (1,656) Selling, general and administrative (480) (448) Depreciation and amortization (96) (99) Interest expense, net Interest expense, net (42) (68) Other, net (166) (76) Income before income tax expense Income before income tax expense 561 845 Income tax expense Income tax expense (146) (232) Net income Net income 415 613 Less: Net income attributable to noncontrolling interests Less: Net income attributable to noncontrolling interests (8) (8) Net income attributable to Fox Corporation stockholders Net income attributable to Fox Corporation stockholders $ 407 $ 605 EARNINGS PER SHARE DATA EARNINGS PER SHARE DATA Weighted average shares: Weighted average shares: Basic Basic 492 550 Diluted Diluted 494 552 Net income attributable to Fox Corporation stockholders per share: Net income attributable to Fox Corporation stockholders per share: Basic Basic $ 0.83 $ 1.10 Diluted Diluted $ 0.82 $ 1.10 CombinedConsolidated Financial Statements.COMBINEDCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFor the three months ended September 30, 2023 2022 Net income $ 415 $ 613 Other comprehensive loss, net of tax: Benefit plan adjustments and other (2) (2) Other comprehensive loss, net of tax (2) (2) Comprehensive income 413 611 (8) (8) Comprehensive income attributable to Fox Corporation stockholders $ 405 $ 603 (a) Net income attributable to noncontrolling interests includes $10 millionnil and $13$(5) million for the three months ended December 31, 2018September 30, 2023 and 2017, respectively, and $21 million and $23 million for the six months ended December 31, 2018 and 2017,2022, respectively, relating to redeemable noncontrolling interests.CombinedConsolidated Financial Statements.MILLIONS)MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)
2023
2023(unaudited) (audited) ASSETS Current assets Cash and cash equivalents $ 3,829 $ 4,272 Receivables, net 2,420 2,177 Inventories, net 751 543 Other 239 265 Total current assets 7,239 7,257 Non-current assets Property, plant and equipment, net 1,683 1,708 Intangible assets, net 3,072 3,084 Goodwill 3,557 3,559 Deferred tax assets Deferred tax assets 3,042 3,090 Other non-current assets 3,056 3,168 Total assets $ 21,649 $ 21,866 LIABILITIES AND EQUITY Current liabilities Borrowings Borrowings $ 1,250 $ 1,249 Accounts payable, accrued expenses and other current liabilities 2,339 2,514 Total current liabilities 3,589 3,763 Non-current liabilities Borrowings Borrowings 5,962 5,961 Other liabilities 1,419 1,484 Redeemable noncontrolling interests 228 213 Commitments and contingencies Equity 3 3 2 2 Additional paid-in capital Additional paid-in capital 7,991 8,253 Retained earnings Retained earnings 2,539 2,269 Accumulated other comprehensive loss Accumulated other comprehensive loss (151) (149) Total Fox Corporation stockholders’ equity Total Fox Corporation stockholders’ equity 10,384 10,378 Noncontrolling interests 67 67 Total equity 10,451 10,445 Total liabilities and equity $ 21,649 $ 21,866 (a)
The accompanying notes are an integral part of these Unaudited (b) CombinedConsolidated Financial Statements.COMBINEDCONSOLIDATED STATEMENTS OF CASH FLOWSFor the three months ended September 30, 2023 2022 OPERATING ACTIVITIES Net income $ 415 $ 613 Adjustments to reconcile net income to cash provided by operating activities Adjustments to reconcile net income to cash provided by operating activities Depreciation and amortization 96 99 Amortization of cable distribution investments 4 4 Equity-based compensation Equity-based compensation 24 7 Other, net 166 76 Deferred income taxes 47 104 Change in operating assets and liabilities, net of acquisitions and dispositions Receivables and other assets (284) (260) Inventories net of programming payable Inventories net of programming payable (253) (333) Accounts payable and accrued expenses Accounts payable and accrued expenses (187) (127) Other changes, net Other changes, net (27) 87 Net cash provided by operating activities Net cash provided by operating activities 1 270 INVESTING ACTIVITIES Property, plant and equipment (71) (74) Purchase of investments — (31) Other investing activities, net 13 (13) Net cash used in investing activities Net cash used in investing activities (58) (118) FINANCING ACTIVITIES Repurchase of shares Repurchase of shares (250) (250) Dividends paid and distributions Dividends paid and distributions (135) (147) Sale of subsidiary noncontrolling interest Sale of subsidiary noncontrolling interest — 25 Other financing activities, net Other financing activities, net (1) (30) Net cash used in financing activities (386) (402) Net decrease in cash and cash equivalents Net decrease in cash and cash equivalents (443) (250) Cash and cash equivalents, beginning of year 4,272 5,200 Cash and cash equivalents, end of period $ 3,829 $ 4,950 CombinedConsolidated Financial Statements. Class A Class B Additional Paid-in Capital Retained
EarningsTotal
EquityCommon Stock Common Stock Shares Amount Shares Amount Balance, June 30, 2023 263 $ 3 235 $ 2 $ 8,253 $ 2,269 $ (149) $ 10,378 $ 67 $ 10,445 Net income — — — — — 407 — 407 8 415 Other comprehensive loss — — — — — — (2) (2) — (2) Dividends — — — — — (127) — (127) — (127) Shares repurchased (15) — — — (258) 6 — (252) — (252) Other 1 — — — (4) (16) — (20) (8) (28) Balance, September 30, 2023 249 $ 3 235 $ 2 $ 7,991 $ 2,539 $ (151) $ 10,384 $ 67 $ 10,451 Balance, June 30, 2022 308 $ 3 243 $ 3 $ 9,098 $ 2,461 $ (226) $ 11,339 $ 36 $ 11,375 Net income — — — — — 605 — 605 13 618 Other comprehensive loss — — — — — — (2) (2) — (2) Dividends — — — — — (137) — (137) — (137) Shares repurchased (5) — (3) — (124) (126) — (250) — (250) Other — — 1 (1) (25) (8) — (34) 15 (19) Balance, September 30, 2022 303 $ 3 241 $ 2 $ 8,949 $ 2,795 $ (228) $ 11,521 $ 64 $ 11,585 (a) Excludes Redeemable noncontrolling interests which are reflected in temporary equity (See Note 4—Fair Value under the heading “Redeemable Noncontrolling Interests”). COMBINEDCONSOLIDATED FINANCIAL STATEMENTS 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.Proposed DistributionOn June 20, 2018, Twenty-First Century Fox, Inc. (“Twenty-First Century Fox” or “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 stockholders (other than holders that are subsidiaries of 21CF) on a pro rata basis (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. The Separation and Distribution are anticipated to be completed on March 19, 2019 as part of the series of transactions contemplated by the 21CF Disney Merger Agreement (collectively, the “Transactions”). Following the completion of the Separation and Distribution, FOX will become a standalone public company.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, the Company expects to enter into certain other related agreements which govern certain aspects of the Company’s relationship with 21CF and Disney following the Separationand which will become effective on March 19, 2019. These include (i) a tax matters agreement, (ii) intellectual property license agreements, (iii) a studio lot lease and management agreement, (iv) transition services agreements, (v) commercial agreements and (vi) an employee matters agreement.5FOX CORPORATIONNOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTSTheaccompanying Unaudited CombinedConsolidated Financial Statements of FOX werehave 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 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. 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 CombinedConsolidated 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.These interim Unaudited Combined Financial Statements and notes thereto should be read in conjunction with the audited combined financial statements and notes thereto included in the Company’s Registration Statement on Form 10, as amended and filed with the Securities and Exchange Commission (the “SEC”) on January 7, 2019 (the “Form 10”).These financial statements are presented as if such businesses had been combined for all periods presented. The assets and liabilities in the Unaudited Combined Financial Statements have been reflected on a historical cost basis, as immediately prior to the Distribution all of the assets and liabilities presented are wholly owned by 21CF and are being transferred to the combined FOX group at carry-over basis. The Unaudited Combined Statements of Operations include allocations for certain support functions that are 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. 21CF does 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 results of operations, financial position and cash flows had it been a standalone company during the periods 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 income tax (expense) benefit in the Unaudited Combined Statements of Operations has been 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 attributable to the Company. All significant intracompany transactions and accounts within the Company’s combined businesses have been eliminated.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 the Company’s ownership interest in a combined subsidiary, where a controlling financial interest is retained, is accounted for as a capital transaction. When the Company ceases to have a controlling interest in a combined subsidiary, the Company will recognize a gain or loss in net income upon deconsolidation.CombinedConsolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts that are reported in the Unaudited CombinedConsolidated 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.6FOX CORPORATIONNOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTSends onended June 30, of each year. Certain fiscal 2018 amounts2023 as filed with the Securities and Exchange Commission on August 11, 2023 (the “2023 Form 10-K”).reclassifiedeliminated. Investments in and advances to conform to the fiscal 2019 presentation.Recently Adopted and Recently Issued Accounting Guidance and U.S. Tax ReformAdoptedIn January 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 amendmentsentities or joint ventures 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,which the Company recorded changeshas significant influence, but less than a controlling financial interest, are accounted for using the equity method. Significant influence generally exists when the Company owns an interest between 20% and 50%. Equity securities in which the fair value of equity investmentsCompany has no significant influence (generally less than a 20% ownership interest) 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 haveare accounted for at fair value based on quoted market prices. Equity securities without readily determinable fair values will be recognized prospectivelyare accounted for either at fair value or using the measurement alternative method which is 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. All gains and losses on investments in equity securities are recognized in the Unaudited Consolidated Statements of Operations.adjustments relatedCompany’s fiscal year ends on June 30 (“fiscal”) of each year. Certain fiscal 2023 amounts have been reclassified to conform 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. fiscal 2024 presentation.objective of ASU 2018-02 is to eliminate the stranded tax effects resulting from the Tax Act (as defined below)unaudited 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).IssuedIn 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 assets on the balance sheet and disclosure of key information about leasing arrangements. Topic 842 will be effective for the Company for annual and interim reporting periods beginning July 1, 2019. The Company expects to apply Topic 842 on a modified retrospective basis with the cumulative effect, if any, of initially applying the new guidance recognized 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 combinedaudited consolidated 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 the Form 10), the Company expects that the impact of recognizing operating lease liabilities and right-of-use assets will be significant to the Company’s Combined Balance Sheet. The Company is in process 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 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 amendments 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 the Company 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 ReformOn December 22, 2017, the U.S. government enacted tax legislation commonlyare referred to as the Tax Cuts“Financial Statements” herein. The unaudited consolidated statements of operations are referred to as the “Statements of Operations” herein. The unaudited and Jobs Act (the “Tax Act”). The Tax Act significantly revisesaudited consolidated balance sheets are referred to as the future ongoing U.S. corporate income tax by, among other7FOX CORPORATIONNOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTSthings, 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 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”).Fiscal 2019Infirst quarter of fiscal 2019,Company’s strategy to strengthen its core brands, grow its digital businesses and selectively enhance production capabilities for its digital and linear platforms. During the three months ended September 30, 2023 and 2022, 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 and Caffeine Studios as an equity method investment.Fiscal 2018In 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 made no acquisitions.Network owned and operated station in that market.CORPORATION
2023
2023(in millions) Licensed programming, including prepaid sports rights Licensed programming, including prepaid sports rights $ 959 $ 720 Owned programming Owned programming 529 465 Total inventories, net 1,488 1,185 Less: current portion of inventories, net (751) (543) Total non-current inventories, net Total non-current inventories, net $ 737 $ 642 Owned programming Owned programming Released Released $ 219 $ 256 In-process or other In-process or other 310 209 Total Total $ 529 $ 465 For the three months ended September 30, 2023 2022 (in millions) Total amortization expense $ 995 $ 854 In accordance with ASC 820, “Fair Value Measurement,” fair8FOX CORPORATIONNOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTSliabilitiesredeemable noncontrolling interests 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 As of September 30, 2023 Total Level 1 Level 2 Level 3 (in millions) Investments in equity securities Investments in equity securities $ 727 $ 727 (a) $ — $ — (b)(228) — — (228) (b) Total $ 499 $ 727 $ — $ (228) Fair value measurements As of June 30, 2023 Total Level 1 Level 2 Level 3 (in millions) Investments in equity securities $ 884 $ 884 (a) $ — $ — Redeemable noncontrolling interests (213) — — (213) (b) Total $ 671 $ 884 $ — $ (213) (a)Represents(a) The investments categorized as Level 1 primarily represent an investment in equity securities of Roku, Inc.Flutter Entertainment plc (“Roku”Flutter”) with a readily determinable fair value.(b)(b) The Company utilizes both the market and income approach valuation techniquetechniques 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.redeemable noncontrolling interests. Examples of utilized unobservable inputs are future cash flows and long termlong-term growth rates.The Company accounts for redeemable noncontrolling interests in accordance with ASC 480-10-S99-3A, “Distinguishing Liabilities from Equity” (“ASC 480-10-S99-3A”), because their exercise is outside the control of the Company. at fair value are put arrangementsrights held by the noncontrolling interestsminority shareholders in one of the Company’s majority-owned sports networks.For the three months ended September 30, 2023 2022 (in millions) Beginning of period $ (213) $ (188) Net loss Net loss — 5 Accretion and other (15) (10) End of period $ (228) $ (193) (a)As a result of the expiration of a portion of the minority shareholder’s put right, approximately $200 million was reclassified into 21CF investment.As of December 31, 2018,The put right held by the redeemable noncontrolling interests are not exercisable. A portion of theCredible minority shareholder’s put rightshareholder will become exercisable in July 2019.9
2023
2023(in millions) Borrowings Fair value $ 6,604 $ 6,895 Carrying value $ 7,212 $ 7,210 December 31, 2018,September 30, 2023, the Company had no individual customers that accounted for 10% or more of the Company’s receivables. As of June 30, 2018,2023, the Company had two customersone customer that accounted for approximately 21%11% of the Company’s receivables.In January 2019,Company issued $750 million of 3.666%2023 Form 10-K under the heading “Public Debt – Senior Notes due 2022,Issued”) of which $1.25 billion of 4.030% Senior Notessenior notes are due 2024, $2.00 billion of 4.709% Senior Notes due 2029,in January 2024. In October 2023, the Company issued $1.25 billion of 5.476% Senior Notes6.500% senior notes due 2039 and $1.55 billion of 5.576% Senior Notes due 2049 (the “Notes Offering”). The Company intends 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 AgreementOn March 15, 2019,2033. In addition, the Company entered intois party to 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 forproviding 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 increaseJune 2028 (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 fees2023 Form 10-K under the Revolvingheading “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, 2019,September 30, 2023, there were no borrowings outstanding under the Revolving Credit Agreement.Bridge Credit AgreementIn addition, as previously disclosed, 21st Century Fox America, Inc.revolving credit agreement.a wholly owned subsidiary of 21CF, entered into a commitment letter on behalf of FOX with the financial institutions party thereto to provide FOX with financing inand Class B Common Stock, par value $0.01 per share (the “Class B Common Stock”). The program has no time limit and may be modified, suspended or discontinued at any time.Dividend. On March 15, 2019, in anticipation of the payment of the Dividend,stock repurchase program, the Company entered into an accelerated share repurchase (“ASR”) agreement in February 2023, under which the Company paid a $1.7third-party financial institution $1 billion 364-Day Bridge Term Loan Agreement (the “Bridge Credit Agreement”) with theand received an 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 termsdelivery of approximately 22.5 million shares of Class A Common Stock, representing 80% of the Bridge Credit Agreement includeshares expected to be repurchased under the requirement thatASR agreement, at a price of $35.54 per share, which was the Nasdaq Global Select Market (“Nasdaq”) closing share price of the Class A Common Stock on February 8, 2023. Upon settlement of the ASR agreement in August 2023, the Company maintain specific leverage ratios and limitations on indebtedness.received a final delivery of approximately 7.8 million shares of Class A Common Stock. The interest rates and commitment feefinal number of shares purchased 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 up to LIBOR plus 2.00%, and the commitment fee on undrawn funds is 0.125%. The Company will also payASR agreement was determined using a duration fee on eachprice of the 90th, 180th and 270th day after the funding of the loans in 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.10following tables summarize changes in equity:
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.(a)Excludes Redeemable noncontrolling interests which are reflected in temporary equity (See Note 4 - Fair Value under the heading “Redeemable Noncontrolling Interests”).
In total, the Company repurchased approximately 15.4 million shares of Class A Common Stock for approximately $250 million during the three months ended September 30, 2023.(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 IncomeComprehensive income is reported inRepurchased shares are retired and reduce the Unaudited Combined Statementsnumber of Comprehensive Incomeshares issued and consistsoutstanding. The Company allocates the amount of Net incomethe repurchase price over par value between additional paid-in capital 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.material activity within Other comprehensive income:dividends declared per share on both the Company’s Class A Common Stock and Class B Common Stock:
December 31, 2017
December 31, 2017For the three months ended September 30, 2023 2022 Cash dividend per share $ 0.26 $ 0.25 11FOX CORPORATIONNOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTSAccumulated other comprehensive (loss) incomefollowing table summarizesCompany declared a semi-annual dividend of $0.26 per share on both the changes inClass A Common Stock and the components of Accumulated other comprehensive (loss) income, net of tax:
Class B Common Stock during the three months ended September 30, 2023, which was paid on September 27, 2023.(a)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.Until the completion of the Distribution, the Company’s employees participate in 21CF’s equity plans. 21CF 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,plans, including the Fox Corporation 2019 Shareholder Alignment Plan (the “SAP”), that will become effective in connection with the Distribution. Equity-based compensation, including stock options, stock appreciation rights, restricted and unrestricted stock, restricted stock units (“RSUs”) and other types of FOX equity awards may be granted. The Company’s officers, directors and employees will be eligible to participate(See Note 12—Equity-Based Compensation in the SAP.In connection with the Distribution, 21CF performance stock units (“PSUs”) scheduled to vest in 2019 and 50% of 21CF retention RSUs were accelerated and paid out in shares of 21CF class A common stock in March 2019. 21CF RSUs and PSUs scheduled to vest after 2019 will be converted into new equity awards of the Company, using a formula designed to preserve the value of the awards immediately prior 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 performance goals. In addition, 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 of Directors of FOX will consider making initial grants under the SAP in connection with the Distribution. These shareholder alignment grants would likely consist of a mix of stock options and RSUs.12FOX CORPORATIONNOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTSFor the three months ended September 30, 2023 2022 (in millions) Equity-based compensation Equity-based compensation $ 24 $ 7 Intrinsic value of all settled equity-based awards $ 65 $ 76 Tax benefit on settled equity-based awards Tax benefit on settled equity-based awards $ 10 $ 14 (a)Includes allocated expense for both executive directors and corporate executives of 21CF, allocated using a proportional allocation driver, which management has deemed to be reasonable.December 31, 2018,September 30, 2023, 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$150 million and is expected to be recognized over a weighted average period between one and two years.NOTE 8. RELATED PARTY TRANSACTIONS AND 21CF INVESTMENTRelated Party TransactionsIn the ordinary coursebusiness,September 30, 2023 and 2022, the Company enters into transactions with related parties, including subsidiarieshad approximately 5 million and equity affiliates6 million stock options outstanding, respectively. The computation of 21CF, to buy and/or sell programming and purchase and/or sell advertising. The following table sets forth the net revenue from related parties included in the Combined Statements of Operations:Corporate Allocations and 21CF InvestmentHistorically, 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 provided on a centralized basis within 21CF and not recorded at the business unit level, such as expenses related to finance, legal, insurance, information technology, compliance and human resources management activities, among others (“General Corporate Expenses”). For purposes of these standalone Unaudited Combined Financial Statements, 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. These expenses have been allocated to the Company 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 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 maydiluted earnings per share did not include all of the actual expenses thatstock optionsincurredantidilutive, and, mayfor those shares that are contingently issuable, all necessary conditions have not reflect the Company’s combined results of operations, financial position and cash flows had it been a standalone company duringsatisfied for the periods presented. Actual costs that would have been incurred if the Company had been a standalone company would depend on multiple factors, including organizational structurestrategic decisions made in various areas, including information technology and infrastructure. For the purposes of these standalone Unaudited Combined Financial Statements, the corporate allocations recorded forGrantedDecember 31, 2018September 30, 2023 and 20172022, restricted stock units (“RSUs”) with a value of $95approximately $1.7 million and $83$1.5 million respectively,vested and forRSUs with a value of approximately $1.8 million and $2.0 million were granted, respectively. These RSUs generally vest in equal annual installments over a three-year period subject to participants’ continued employment with the sixCompany.December 31, 2018September 30, 2023 and 2017 of $180 million and $137 million, respectively, were General Corporate Expenses of 21CF which were not historically allocated to the Company.13FOX CORPORATIONNOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTSare reflectedgranted approximately 4 million performance-based stock options, in each period, which will vest in full at the historical Unaudited Combined Financial Statements. All significant intercompany balances between 21CFend of a three-year performance period if the market condition is met, and the Company are reflected in the Unaudited Combined Statementshave a term of Cash Flows as a financing activity and in the Combined Balance Sheets as a 21CF investment.The following table summarizes the components of the net (decrease) increase in the 21CF investment for the three and six months ended December 31, 2018 and 2017:(a)The nature of activities included in the line item ‘Cash pooling and general financing activities’ 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.9.8. COMMITMENTS AND CONTINGENCIESDecember 31, 2018September 30, 2023 and June 30, 20182023 were approximately $34$38 billion and $32$39 billion, respectively. The increasedecrease from June 30, 20182023 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 Company issued approximately $6.8 billion of senior notes (See Note 5 - Borrowings).Profits Participants LitigationOn 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”) against 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’s14FOX CORPORATIONNOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTSdistribution 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.FOX News ChannelThe 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 financial condition, future results of operations or liquidity.U.K. Newspaper Matters IndemnityIn 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 the Company. The liability recorded in the Combined Balance Sheets related to the indemnity was approximately $45 million and $50 million as of December 31, 2018 and June 30, 2018, respectively.OtherEquity 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.abovebelow 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.15FOX CORPORATIONNOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTScombinedconsolidated financial condition, future results of operations or liquidity. Each member of the 21CF consolidated group, which includes 21CF, the Company (prior to the Transaction (as defined in Note 1—Description of Business and Basis of Presentation in the 2023 Form 10-K under the heading “The Transaction”)) and 21CF’s other subsidiaries, is jointly and severally liable for the U.S. federal income and, in certain jurisdictions, state tax liabilityliabilities of each other member of the consolidated group. Consequently, the Company could be liable in the event any suchwill requireentered into in connection with the Separation (as defined in Note 1—Description of Business and Basis of Presentation in the 2023 Form 10-K under the heading “The Transaction”) requires 21CF and/or The Walt Disney Company 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.10.9. PENSION AND OTHER POSTRETIREMENT BENEFITSCertain of the Company’s U.S. employees participateddefined benefitand/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 employeesPension 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 allocableplans are closed to new participants with the Company’s employees were transferred to the Company. Projected benefit obligationsexception 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.$14$13 million and $63$16 million for the three months ended December 31, 2018September 30, 2023 and 2017, respectively, and $27 million and $74 million for the six months ended December 31, 2018 and 2017, respectively, which primarily relates to Shared Plans.11.10. SEGMENT INFORMATIONprincipally consists of the productionproduces and licensing oflicenses news and sports content distributed primarily through traditional cable television systems, direct broadcast satellite operators and telecommunication companies, and online video distributors (collectively,virtual multi-channel video programming distributors),distributors and other digital platforms, primarily in the U.S.principally consists ofproduces, acquires, markets and distributes programming through the acquisition, marketing and distribution ofFOX broadcast network, programming nationally under the FOX brand and the operation of 28advertising supported video-on-demand service Tubi, 29 full power broadcast television stations, including 11 duopolies, and other digital platforms, primarily in the U.S. (of theseEighteen of the broadcast television stations 17 are affiliated with the FOX Network, nine10 are affiliated with MyNetworkTV, one is affiliated with both The CW Television Network and MyNetworkTV and one is an independent station).eliminations and the FOX Studios lot.eliminations. The FOX Studios lot,Studio 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.OIBDA.EBITDA. Due to the integrated nature of these operating segments, estimates and judgments are made in allocating certain assets, revenues and expenses.16FOX CORPORATIONNOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTSOIBDAEBITDA is defined as Revenues less Operating expenses and Selling, general and administrative expenses. Segment OIBDAEBITDA does not include: Amortization of cable distribution investments, Depreciation and amortization, Impairment and restructuring charges, Interest expense, net, Other, net and Income tax (expense) benefit.expense. Management believes that Segment OIBDAEBITDA 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).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.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:OIBDAEBITDA for the three and six months ended December 31, 2018September 30, 2023 and 2017:2022: For the three months ended September 30, 2023 2022 (in millions) Revenues Cable Network Programming $ 1,387 $ 1,431 Television 1,780 1,714 Other, Corporate and Eliminations 40 47 Total revenues $ 3,207 $ 3,192 Segment EBITDA Segment EBITDA Cable Network Programming $ 607 $ 742 Television 351 409 Other, Corporate and Eliminations (89) (59) Amortization of cable distribution investments Amortization of cable distribution investments (4) (4) Depreciation and amortization Depreciation and amortization (96) (99) Interest expense, net Interest expense, net (42) (68) Other, net Other, net (166) (76) Income before income tax expense Income before income tax expense 561 845 Income tax expense Income tax expense (146) (232) Net income Net income 415 613 Less: Net income attributable to noncontrolling interests Less: Net income attributable to noncontrolling interests (8) (8) Net income attributable to Fox Corporation stockholders Net income attributable to Fox Corporation stockholders $ 407 $ 605 Revenues by Segment by Component
17 For the three months ended September 30, 2023 2022 (in millions) Cable Network Programming Affiliate fee $ 1,005 $ 1,029 Advertising 290 316 Other 92 86 Total Cable Network Programming revenues 1,387 1,431 Television Advertising 910 905 Affiliate fee 735 682 Other 135 127 Total Television revenues 1,780 1,714 Other, Corporate and Eliminations 40 47 Total revenues $ 3,207 $ 3,192 COMBINEDCONSOLIDATED FINANCIAL STATEMENTSFor the three months ended September 30, 2023 2022 (in millions) Depreciation and amortization Cable Network Programming $ 18 $ 17 Television 29 29 Other, Corporate and Eliminations 49 53 Total depreciation and amortization $ 96 $ 99
2023
2023(in millions) Assets Cable Network Programming $ 2,662 $ 2,658 Television 8,267 7,803 Other, Corporate and Eliminations 9,843 10,371 Investments 877 1,034 Total assets $ 21,649 $ 21,866 Future Performance ObligationsAs of December 31, 2018, approximately $2.3 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.18FOX CORPORATIONNOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS12.11. ADDITIONAL FINANCIAL INFORMATIONFor the three months ended September 30, 2023 2022 (in millions) Interest expense $ (91) $ (87) Interest income 49 19 Total interest expense, net $ (42) $ (68) Unaudited Combined Statements of Operations:For the three months ended September 30, 2023 2022 (in millions) $ (171) $ 21 (c)(b)(5) (61) Other 10 (36) Total other, net $ (166) $ (76) (a)The acquisition related and other transaction costs for the three and six months ended December 31, 2018 are related to the Separation and Distribution which includes retention related costs.(b)Represents(a) Net (losses) gains on investments in equity securities includes the unrealized losses(losses) gains related to changesthe change in fair value of the Company’s investment in Roku which are recognized in net income in accordance with ASU 2016-01Flutter (See Note 1 - Description of Business4—Fair Value).(b) See Note 8—Commitments and Basis of PresentationContingencies under the heading “Recently Adopted and Recently Issued Accounting Guidance and U.S. Tax Reform”).headings “U.K. Newspaper Matters Indemnity.” The decrease for the three months ended September 30, 2023, as compared to the corresponding period of fiscal 2023, was attributable to an increase in the number of civil claims submitted in fiscal 2023 in advance of the September 30, 2022 cutoff date set by the judge for this phase of the litigation.(c)See Note 9 - Commitments and Contingencies.(d)The settlement loss was primarily related to the Shared Plans (See Note 12 - Pension and Other Postretirement Benefits in the Form 10).Receivables, netReceivables 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.19FOX CORPORATIONNOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTSCombined Balance Sheets:
2023
2023 (in millions) Operating lease assets Operating lease assets $ 931 $ 947 877 1,034 Inventories, net 737 642 Grantor Trust Grantor Trust 262 276 Other Other 249 269 Total other non-current assets $ 3,056 $ 3,168 (a)Includes an investment with a readily determinable fair value of $185 million and $257 million as of December 31, 2018 and June 30, 2018, respectively (See Note 4 - Fair Value). See Note 2 - Acquisitions, Disposals and Other Transactions for information on recent investments.(b)Other includes $230(a) Includes investments accounted for at fair value on a recurring basis of $727 million and $265$884 million as of December 31, 2018September 30, 2023 and June 30, 2018,2023, respectively related to the Trust (as defined in(See Note 12 - Pension and Other Postretirement Benefits in the Form 10)4—Fair Value).Combined Balance Sheets:
2023
2023(in millions) Programming payable Programming payable $ 849 $ 785 Accrued expenses 812 1,028 Deferred revenue 254 160 Operating lease liabilities Operating lease liabilities 70 72 Other current liabilities 354 469 Total accounts payable, accrued expenses and other current liabilities $ 2,339 $ 2,514 (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.Combined Balance Sheets:(a)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 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
2023
2023(in millions) Non-current operating lease liabilities $ 907 $ 925 Accrued non-current pension/postretirement liabilities 334 361 Other non-current liabilities 178 198 Total other liabilities $ 1,419 $ 1,484 For the three months ended September 30, 2023 2022 (in millions) Supplemental cash flows information Cash paid for interest $ (158) $ (151) Cash paid for income taxes $ (2) $ (8) combinedconsolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q as well asand the audited combined financial statementsAnnual Report on Form 10-K for the fiscal year ended June 30, 2018 and other disclosure included in the Form 10(“fiscal”) 2023 as amended and filed with the SEC on January 7, 2019August 11, 2023 (the “Form 10”).INTRODUCTIONOn June 20, 2018, Twenty-First Century Fox, Inc. (“Twenty-First Century Fox” or “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 stockholders (other than holders that are subsidiaries of 21CF) on a pro rata basis (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. The Separation and Distribution are anticipated to be completed on March 19, 2019 as part of the series of transactions contemplated by the 21CF Disney Merger Agreement (collectively, the “Transactions”“2023 Form 10-K”). FollowingThe unaudited consolidated financial statements are referred to as the completion of the Separation and Distribution, FOX will become a standalone public company.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.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, the Company expects to enter into certain other related agreements which govern certain aspects of the Company’s relationship with 21CF and Disney following the Separation and which will become effective on March 19, 2019. These include (i) a tax matters agreement, (ii) intellectual property license agreements, (iii) a studio lot lease and management agreement, (iv) transition services agreements, (v) commercial agreements and (vi) an employee matters agreement.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. - —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, 2018September 30, 2023 and 20172022 that the Company believes are important in understanding its results of operations and financial condition or to disclose known trends. - —This section provides an analysis of the Company’s results of operations for the three and six months ended December 31, 2018September 30, 2023 and 2017.2022. This analysis is presented on both a combinedconsolidated 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.Resources - Resources—This section provides an analysis of the Company’s cash flows for the sixthree months ended December 31, 2018September 30, 2023 and 2017,2022, as well as a discussion of the Company’s outstanding debt and commitments, both firm and contingent, that existed as of December 31, 2018.September 30, 2023. 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.Television•Cable Network Programming, which principally consists ofproduces and licenses news and sports content distributed through traditional cable television systems, direct broadcast satellite operators and telecommunication companies (“traditional MVPDs”), virtual multi-channel video programming distributors (“virtual MVPDs”) and other digital platforms, primarily in the acquisition, marketingU.S.distribution ofdistributes programming through the FOX broadcast network, programming nationally under the FOX brand and the operation of 28advertising-supported video-on-demand (“AVOD”) service Tubi, 29 full power broadcast television stations, including 11 duopolies, and other digital platforms, primarily in the U.S. (of theseEighteen of the broadcast television stations 17 are affiliated with the FOX Network, nine10 are affiliated with MyNetworkTV, one is affiliated with both The CW Television Network and MyNetworkTV and one is an independent station).eliminations and the FOX Studios lot.eliminations. The FOX Studios lot,Studio 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.Fiscal 2019 Affiliate Fee OutlookThe Company expectspace of growth of Cable Network Programming affiliate fee revenueterm "MVPDs" to meaningfully decelerate over the remaining six months of the fiscal year comparedrefer collectively to the prior year, as the Company lapses prior year contractual rate increases from affiliate agreement renewals.traditional MVPDs and virtual MVPDs.and six months ended December 31, 2018September 30, 2023 versus the three and six months ended December 31, 2017 and six months ended December 31, 2018,September 30, 2023, as compared to the three and six months ended December 31, 2017:September 30, 2022: For the three months ended September 30, 2023 2022 Change % Change (in millions, except %) Better/(Worse) Revenues Affiliate fee $ 1,740 $ 1,711 $ 29 2 % Advertising 1,200 1,220 (20) (2) % Other 267 261 6 2 % Total revenues 3,207 3,192 15 — % Operating expenses (1,862) (1,656) (206) (12) % Selling, general and administrative (480) (448) (32) (7) % Depreciation and amortization (96) (99) 3 3 % Interest expense, net (42) (68) 26 38 % Other, net (166) (76) (90) ** Income before income tax expense 561 845 (284) (34) % Income tax expense (146) (232) 86 37 % Net income 415 613 (198) (32) % Less: Net income attributable to noncontrolling interests (8) (8) — — % Net income attributable to Fox Corporation stockholders $ 407 $ 605 $ (198) (33) % ** – increased 15% and 16%remained consistent for the three and six months ended December 31, 2018, respectively,September 30, 2023, as compared to the corresponding periodsperiod of fiscal 2018, primarily due to2023, as 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 politicaloffset by lower advertising revenue due to the U.S. midterm elections at the FOX Television Stations Group.revenue. The increase in affiliate fee revenue was primarily attributabledue to higher fees received from television stations that are affiliated with the FOX Network and higher average rates per subscriber, across all networks, led by contractual rate increases on existing affiliate agreements and from affiliate agreement renewals.20% and 19%12% for the three and six months ended December 31, 2018, respectively,September 30, 2023, as compared to the corresponding periodsperiod of fiscal 2018,2023, primarily due to higher sports programming rights amortization and production costs includingdriven by the addition of TNF, partially offset by lower entertainment programming rights amortization as a resultbroadcast of the mix of programming inFIFA Women’s World Cup and the current year as compared torenewed contract with the prior year at the Television Segment.6% and 10%7% 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,September 30, 2023, as compared to the corresponding periodsperiod of fiscal 2018 (See Note 8 – Related Party Transactions2023, primarily due to higher employee-related costs as a result of the transition and 21CF Investment toseparation of a named executive officer of the accompanying Unaudited Combined Financial Statements of FOX under the heading “Corporate Allocations and 21CF Investment” for additional information).Interest expense – Company.increased $9 million and $18 millionnet—Interest expense, net decreased 38% for the three and six months ended December 31, 2018, respectively,September 30, 2023, as compared to the corresponding periodsperiod of fiscal 2018,2023, primarily due to higher interest income as a bridge commitment letter which was entered into during fiscal 2018 (see Note1– Descriptionresult of Business and BasisofPresentation to the audited combined financial statements in the Form 10 for additional information).higher interest rates. – —See Note 12 – 11—Additional Financial Information to the accompanying Unaudited Combined Financial Statements of FOX under the heading “Other, net.”(expense) benefit – expense—The Company’s tax provision and related effective tax rate of 26%for the sixthree months ended December 31, 2018September 30, 2023 was higher than the statutory rate of 21% primarily due to state taxes and other permanent items.The Company’seffective tax ratedecreased 32% for the three and six months ended December 31, 2017 included a provisional $624 million tax benefit as a result of the Tax 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, respectively,September 30, 2023, as compared to the corresponding periodsperiod of fiscal 2018,2023, primarily due to lower Segment EBITDA (as defined below) and the absencechange in fair value of anthe Company’s investment in Flutter Entertainment plc, partially offset by lower expenses for income tax benefit resulting fromand the Tax Act in the prior year (as described above), higher costs related to the Separation and Distribution and unrealized losses on investmentsU.K. Newspaper Matters Indemnity (See Note 12 – 11—Additional Financial Information to the accompanying Unaudited Combined Financial Statements of FOX under the heading “Other, net”). Improved operating results partially offset the decreases in net income for the six months ended December 31, 2018.OIBDA.EBITDA. Due to the integrated nature of these operating segments, estimates and judgments are made in allocating certain assets, revenues and expenses.OIBDAEBITDA is defined as Revenues less Operating expenses and Selling, general and administrative expenses. Segment OIBDAEBITDA does not include: Amortization of cable distribution investments, Depreciation and amortization, Impairment and restructuring charges, Interest expense, net, Other, net and Income tax (expense) benefit.expense. Management believes that Segment OIBDAEBITDA 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. For the three months ended September 30, 2023 2022 Change % Change (in millions, except %) Better/(Worse) Revenues Cable Network Programming $ 1,387 $ 1,431 $ (44) (3) % Television 1,780 1,714 66 4 % Other, Corporate and Eliminations 40 47 (7) (15) % Total revenues $ 3,207 $ 3,192 $ 15 — % For the three months ended September 30, 2023 2022 Change % Change (in millions, except %) Better/(Worse) Segment EBITDA Cable Network Programming $ 607 $ 742 $ (135) (18) % Television 351 409 (58) (14) % Other, Corporate and Eliminations (89) (59) (30) (51) % $ 869 $ 1,092 $ (223) (20) % (a) For a discussion of Adjusted EBITDA and a reconciliation of Net income to Adjusted EBITDA, see “Non-GAAP Financial Measures” below. For the three months ended September 30, 2023 2022 Change % Change (in millions, except %) Better/(Worse) Revenues Affiliate fee $ 1,005 $ 1,029 $ (24) (2) % Advertising 290 316 (26) (8) % Other 92 86 6 7 % Total revenues 1,387 1,431 (44) (3) % Operating expenses (649) (564) (85) (15) % Selling, general and administrative (135) (129) (6) (5) % Amortization of cable distribution investments 4 4 — — % Segment EBITDA $ 607 $ 742 $ (135) (18) % For the three months ended September 30, 2023 2022 Change % Change (in millions, except %) Better/(Worse) Revenues Advertising $ 910 $ 905 $ 5 1 % Affiliate fee 735 682 53 8 % Other 135 127 8 6 % Total revenues 1,780 1,714 66 4 % Operating expenses (1,198) (1,071) (127) (12) % Selling, general and administrative (231) (234) 3 1 % Segment EBITDA $ 351 $ 409 $ (58) (14) % For the three months ended September 30, 2023 2022 Change % Change (in millions, except %) Better/(Worse) Revenues $ 40 $ 47 $ (7) (15) % Operating expenses (15) (21) 6 29 % Selling, general and administrative (114) (85) (29) (34) % Segment EBITDA $ (89) $ (59) $ (30) (51) % Total Segment OIBDAAdjusted EBITDA 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 netNet income, thus providing insight into both operations and the other factors that affect reported results. Total Segment OIBDAAdjusted 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 beGAAP.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.Income beforeNet income tax (expense) benefit to Total Segment OIBDAAdjusted EBITDA for the three and six months ended December 31, 2018,September 30, 2023, as compared to the three and six months ended December 31, 2017: For the three months ended September 30, 2023 2022 (in millions) Net income Net income $ 415 $ 613 Add Amortization of cable distribution investments 4 4 Depreciation and amortization 96 99 Interest expense, net Interest expense, net 42 68 Other, net 166 76 Income tax expense Income tax expense 146 232 Adjusted EBITDA Adjusted EBITDA $ 869 $ 1,092 **not meaningfulTotal Segment OIBDAAdjusted EBITDA for the three and six months ended December 31, 2018,September 30, 2023, as compared to the three and six months ended December 31, 2017: For the three months ended September 30, 2023 2022 (in millions) Revenues $ 3,207 $ 3,192 Operating expenses (1,862) (1,656) Selling, general and administrative (480) (448) Amortization of cable distribution investments 4 4 Adjusted EBITDA Adjusted EBITDA $ 869 $ 1,092 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:**not meaningfulCable Network Programming (44% and 46% of the Company’s combined revenues in the first six months of fiscal 2019 and 2018, respectively.)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)**not meaningfulRevenues 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 December31, 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.Historically, 21CF provided capital, cash management and other treasury services to theand 21CF will continue to provide treasury services to the Company until the Distribution. Prior to December 31, 2017, substantially allhas approximately $3.8 billion 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, 2018September 30, 2023 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 Company has an unused five-year $1.0 billion unsecured revolving credit facility an unused $1.7 billion 364-Day Bridge Term Loan Agreement and(See Note 5—Borrowings to the accompanying Financial Statements). The Company also has access to the worldwide capital markets, subject to market conditions. (See Note 5 - Borrowings toIn October 2023, the accompanying Unaudited Combined Financial StatementsCompany issued $1.25 billion of FOX).payment of the Dividend, the acquisition of rights and related payments for entertainment and sports programming; operational expenditures including production costs; marketing and promotional expenses; expenses related to operatingbroadcasting the technical facilities of the cable network and broadcaster and investing approximately $150 million to $200 million in establishing stand-alone technical facilities;Company’s programming; employee and facility costs; capital expenditures; acquisitions; andincome taxes, interest and dividend payments.In addition to the acquisitions, salespayments; debt repayments; legal settlements; and possible acquisitions disclosed elsewhere, thestock repurchases.(used in) operating activities for the sixthree months ended December 31, 2018September 30, 2023 and 20172022 was as follows (in millions):For the three months ended September 30, 2023 2022 Net cash provided by operating activities $ 1 $ 270 changedecrease in net cash provided by (used in) operating activities during the sixthree months ended December 31, 2018,September 30, 2023, as compared to the corresponding period of fiscal 2018, is2023, was primarily due to higher cash receipts from political advertising revenuesports rights payments principally due to the renewed contract with the NFL, payments associated with the restructuring in the fourth quarter of fiscal 2023 and lower political advertising receipts due to the absence of the November 2022 U.S. midterm elections at the FOX Television Stations Group.elections.(used in) provided byused in investing activities for the sixthree months ended December 31, 2018September 30, 2023 and 20172022 was as follows (in millions):For the three months ended September 30, 2023 2022 Net cash used in investing activities $ (58) $ (118) changedecrease in net cash (used in) provided byused in investing activities during the sixthree months ended December 31, 2018,September 30, 2023, as compared to the corresponding period of fiscal 2018,2023, was primarily due to the absence of cash received from the Federal Communications Commission’s completed reverse auction for broadcast spectrum and the investments in Caffeine, Inc. and Caffeine Studio, LLC (See Note 2 - Acquisitions, Disposals and Other Transactions to the accompanying Unaudited Combined Financial Statements of FOX).sixthree months ended December 31, 2018September 30, 2023 and 20172022 was as follows (in millions):For the three months ended September 30, For the three months ended September 30, 2023 2022 Net cash used in financing activities $ (386) $ (402) increasedecrease in net cash used in financing activities during the sixthree months ended December 31, 2018,September 30, 2023, as compared to the corresponding period of fiscal 2018,2023, was primarily due to net transferslower dividend payments as a result of fewer shares outstanding.21CFthe accompanying Financial Statements under the heading “Stock Repurchase Program.”$312 million in$0.26 per share on both the sixClass A Common Stock and the Class B Common Stock during the three months ended December 31, 2018 as compared to net transfers to 21CF of $130 million in the six months ended December 31, 2017. The nature of activities included in net transfers to 21CF includes financing activities, capital transfers, cash sweeps, other treasury services and corporate expenses. Prior to December 31, 2017, the majority of the cash balances were swept to 21CFSeptember 30, 2023, which was paid 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.In January 2019, the Company issued approximately $6.8 billion of5 - 5—Borrowings to the accompanying Unaudited Combined Financial StatementsStatements).FOX).Rating Agency Senior Debt Outlook Moody’s Baa2 Stable Standard & Poor’s BBB Stable In March 2019, theentered intohas an unsecuredunused five-year $1.0 billion unsecured revolving credit facility with a maturity date of March 2024June 2028 (See Note 5 – 5—Borrowings to the accompanying Unaudited Combined Financial Statements of FOX)Statements).Bridge Credit AgreementIn 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 Combined Financial Statements of FOX). Contingent Guarantees and Contingencies9 - 8—Commitments and Contingencies to the accompanying Unaudited Combined Financial Statements of FOX.Recent Accounting PronouncementsSee 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.”Caution Concerning Forward-Looking Statementsrecent•evolving technologies and futuredistribution platforms and changes in technology, including alternative methods for the delivery and storage of digital content, and in consumer behavior including changes inas consumers seek more control over when, where and how they consume content;changes in the Company’s strategiescontent, and initiatives and the acceptance thereof by consumers, distributors of the Company’s content, affiliates,related impacts on advertisers and other parties with which the Company does business;the highly competitive nature of the industry in which the Company’s businesses operate;in general, technological developmentsmajor sports events and election cycles, evolving technologies and distribution platforms and related changes in consumer behavior and shifts in advertisers’ spending toward digitalmobile offerings and away from more traditional media;lossnumber of affiliatesubscribers to MVPD services;wherethrough which the Company makes its content available for viewing through online video platforms;events,events; and the continued popularity of the sports franchises, leagues and teams for which the Company has acquired programming rights;terms;Company;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;FCCFederal Communications Commission (“FCC”) rules and policies and FCC decisions regarding revocation, renewal or grant of station licenses;andor transmitter facilities the Company depends on to distribute its programming;lower than expected valuations associated with one of•unfavorable litigation outcomes or investigation results that require the Company’s reporting units, indefinite-lived intangible assets, investmentsCompany to pay significant amounts or long-lived assets; 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;any payments the Company is requiredCOVID-19 and other widespread health emergencies or pandemics and measures to make or liabilities it is required to assume under the Separation Agreementcontain their spread; and any indemnification arrangements entered into in connection with the Separation and Distribution; andII.,I, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q and‘Risk Factors’ in the section entitled “Risk Factors” included in the Company’s Information Statement filed as Exhibit 99.1 to the2023 Form 10.ITEM 3.The Company has exposure to one type of market risk:stock prices.Stock PricesThe Company has a common stock investmentthe 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:(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 RiskSee Note 4 – Fair Value to the accompanying Unaudited Combined Financial Statements of FOX under the heading “Concentrations of Credit Risk.”
(a)Disclosure Controls and Procedures(a)Disclosure Controls and Proceduresquarterly report.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 Financial Reporting(b)Internal Control Over Financial Reportinghas beenwere no changechanges 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 secondfirst quarter of fiscal 20192024 that hashave materially affected, or isare reasonably likely to materially affect, the Company’s internal control over financial reporting.ITEM 1.There have been no material changesdiscussion set forth inaccompanying Unaudited Consolidated Financial Statements of FOX under the section titled “Legal Proceedings” in the Form 10, except as set forth below.On November 25, 2015, Wark Entertainment, Inc. filedheading “Contingencies” for 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 Courtdiscussion 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.
Company’s legal proceedings.previously disclosed in the Company’s Annual Report on Form 10.10-K for the fiscal year ended June 30, 2023, as filed with the Securities and Exchange Commission on August 11, 2023, except as set forth below:
The loss of key personnel, including talent, could disrupt the management or operations of the Company’s business and adversely affect its revenues. (in millions) July 1, 2023 - July 31, 2023 1,487,736 $ 33.61 10,481,608 8.62 September 1, 2023 - September 30, 2023 3,468,283 31.62 15,437,627 16.19 $ 2,150 Not applicable(a) The Company has not made any purchases of Class A Common Stock or 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”), 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) The Company’s Board of Directors has authorized a stock repurchase program, under which the Company can repurchase $7 billion of Common Stock. The program has no time limit and may be modified, suspended or discontinued at any time. (d) ITEM 3.applicableapplicable.ITEM 4.applicableapplicable.ITEM 5.applicableapplicable.(a)Exhibits.4.110.1 4.231.1 4.34.44.54.64.731.1December 31, 2018September 30, 2023 formatted in eXtensibleInline XBRL (eXtensible Business Reporting Language:Language): (i) Unaudited CombinedConsolidated Statements of Operations for the three and six months ended December 31, 2018September 30, 2023 and 2017;2022; (ii) Unaudited CombinedConsolidated Statements of Comprehensive Income for the three and six months ended December 31, 2018September 30, 2023 and 2017;2022; (iii) CombinedConsolidated Balance Sheets as of December 31, 2018September 30, 2023 (unaudited) and June 30, 20182023 (audited); (iv) Unaudited CombinedConsolidated Statements of Cash Flows for the sixthree months ended December 31, 2018September 30, 2023 and 2017;2022; (v) Unaudited Consolidated Statements of Equity for the three months ended September 30, 2023 and (v)2022; and (vi) Notes to the Unaudited CombinedConsolidated Financial Statements.**Filed herewith.104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). **Furnished herewith.* Filed herewith. ** Furnished herewith. Fox CorporationFox Corporation
(Registrant)By:By: /s/ Steven Tomsic Steven Tomsic Chief Financial Officer Date: November 2, 2023 Date: March 18, 201936