UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended ~~December 31, 2019~~September 30, 2020

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

Commission file number 001-38776

FOX CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware		83-1825597
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
1211 Avenue of the Americas, New York, New York		10036
(Address of Principal Executive Offices)		(Zip Code)

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

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


Title of Each Class	Trading Symbols	Name of Each Exchange on Which Registered
Class A Common Stock, par value $0.01 per share	FOXA	The Nasdaq Global Select Market
Class B Common Stock, par value $0.01 per share	FOX	The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐☒	Accelerated filer	☐
Non-accelerated filer	☒☐	Smaller reporting company	☐
Emerging growth company	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ~~Exchange~~ Act). Yes ☐ No ☒

As of ~~February 4,~~October 30, 2020, ~~344,808,708~~337,543,344 shares of Class A Common Stock, par value $0.01 per share, and ~~262,024,419~~257,829,747 shares of Class B Common Stock, par value $0.01 per share, were outstanding.

FOX CORPORATION

FORM 10-Q

TABLE OF CONTENTS

			Page
Part I. Financial Information
	Item 1.	Financial Statements
		Unaudited Consolidated ~~and Combined~~ Statements of Operations for the three ~~and six~~ months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~	1
		Unaudited Consolidated ~~and Combined~~ Statements of Comprehensive Income for the three ~~and six~~ months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~	2
		Consolidated Balance Sheets as of ~~December 31, 2019~~September 30, 2020 (unaudited) and June 30, ~~2019~~2020 (audited)	3
		Unaudited Consolidated ~~and Combined~~ Statements of Cash Flows for the ~~six~~three months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~	4
		Unaudited Consolidated ~~and Combined~~ Statements of Equity for the three ~~and six~~ months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~	5
		Notes to the Unaudited Consolidated ~~and Combined~~ Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2418
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3529
	Item 4.	Controls and Procedures	3529
Part II. Other Information
	Item 1.	Legal Proceedings	30
	Item 1A.	Risk Factors	3630
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3730
	Item 3.	Defaults Upon Senior Securities	3731
	Item 4.	Mine Safety Disclosures	3731
	Item 5.	Other Information	3731
	Item 6.	Exhibits	3832
	Signature		3933

FOX CORPORATION

UNAUDITED CONSOLIDATED ~~AND COMBINED~~ STATEMENTS OF OPERATIONS

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

	For the three months ended December 31,						For the six months ended December 31,						For the three months ended September 30,
	2019			2018			2019			2018			2020			2019
Revenues	$	3,778		$	3,583		$	6,445		$	6,124		$	2,717		$	2,667
Operating expenses		(3,091	)		(2,818	)		(4,559	)		(4,309	)		(1,168	)		(1,468	)
Selling, general and administrative		(431	)		(329	)		(783	)		(628	)		(388	)		(352	)
Depreciation and amortization		(57	)		(51	)		(107	)		(94	)		(68	)		(50	)
Impairment and restructuring charges		-			-			(9	)		-			(35	)		(9	)
Interest expense		(90	)		(15	)		(180	)		(31	)		(99	)		(90	)
Interest income		8			-			25			-			1			17
Other, net		302			(339	)		287			(200	)		519			(15	)

Income before income tax expense		419			31			1,119			862			1,479			700
Income tax expense		(105	)		(7	)		(292	)		(223	)		(362	)		(187	)

Net income		314			24			827			639			1,117			513

Less: Net income attributable to noncontrolling interests		(14	)		(16	)		(28	)		(27	)		(11	)		(14	)

Net income attributable to Fox Corporation stockholders	$	300		$	8		$	799		$	612		$	1,106		$	499

EARNINGS PER SHARE DATA

Weighted average shares
Basic		617			621			619			621			603			622
Diluted		620			621			622			621			605			624

Net income attributable to Fox Corporation stockholders per share
Basic	$	0.49		$	0.01		$	1.29		$	0.99
Diluted	$	0.48		$	0.01		$	1.28		$	0.99
Net income attributable to Fox Corporation stockholders per share - basic and diluted													$	1.83		$	0.80

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

FOX CORPORATION

UNAUDITED CONSOLIDATED ~~AND COMBINED~~ STATEMENTS OF COMPREHENSIVE INCOME

(IN MILLIONS)

	For the three months ended December 31,						For the six months ended December 31,						For the three months ended September 30,
	2019			2018			2019			2018			2020			2019
Net income	$	314		$	24		$	827		$	639		$	1,117		$	513
Other comprehensive income, net of tax
Benefit plan adjustments		8			2			12			3			9			4
								-
Other comprehensive income, net of tax		8			2			12			3			9			4

Comprehensive income		322			26			839			642			1,126			517

Less: Net income attributable to noncontrolling interests^(a)		(14	)		(16	)		(28	)		(27	)		(11	)		(14	)

Comprehensive income attributable to Fox Corporation stockholders	$	308		$	10		$	811		$	615		$	1,115		$	503

^(a)

Net income attributable to noncontrolling interests includes $3$4 million and ~~$10~~$9 million for the three months ended ~~December 31,~~September 30, 2020 and 2019, ~~and 2018, respectively, and $12 million and $21 million for the six months ended December 31, 2019 and 2018,~~ respectively, relating to redeemable noncontrolling interests.

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

FOX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	As of December 31, 2019			As of June 30, 2019			As of September 30, 2020			As of June 30, 2020
	(unaudited)			(audited)			(unaudited)			(audited)
ASSETS
Current assets
Cash and cash equivalents	$	1,991		$	3,234		$	5,061		$	4,645
Receivables, net		2,733			1,967			1,997			1,888
Inventories, net		1,544			1,129			1,271			856
Other		130			148			134			97

Total current assets		6,398			6,478			8,463			7,486

Non-current assets
Property, plant and equipment, net		1,330			1,313			1,539			1,498
Intangible assets, net		2,911			2,851			3,183			3,198
Goodwill		2,991			2,691			3,409			3,409
Deferred tax assets		4,398			4,651			3,963			4,358
Other non-current assets		2,422			1,525			1,940			1,801

Total assets	$	20,450		$	19,509		$	22,497		$	21,750

LIABILITIES AND EQUITY
Current liabilities
Accounts payable, accrued expenses and other current liabilities	$	1,816		$	1,712		$	2,012		$	1,906

Total current liabilities		1,816			1,712

Non-current liabilities
Borrowings		6,753			6,751			7,947			7,946
Other liabilities		1,312			899			1,422			1,482
Redeemable noncontrolling interests		216			189			310			305
Commitments and contingencies
Equity
Class A common stock^(a)		3			4			3			3
Class B common stock^(b)		3			3			3			3
Additional paid-in capital		9,849			9,891			9,668			9,831
Retained earnings		775			357			1,525			674
Accumulated other comprehensive loss		(296	)		(308	)		(408	)		(417	)

Total Fox Corporation stockholders' equity		10,334			9,947			10,791			10,094
Noncontrolling interests		19			11			15			17

Total equity		10,353			9,958			10,806			10,111

Total liabilities and equity	$	20,450		$	19,509		$	22,497		$	21,750

^(a)	Class A common stock, $0.01 par value per share, 2,000,000,000 shares authorized, ~~346,509,519~~338,409,167 shares and ~~354,422,419~~343,608,673 shares issued and outstanding at par as of ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019,~~2020, respectively.

^(b)	Class B common stock, $0.01 par value per share, 1,000,000,000 shares authorized, ~~264,013,196~~258,239,386 shares and ~~266,173,651~~261,078,355 shares issued and outstanding at par as of ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019,~~2020, respectively.

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

FOX CORPORATION

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

(IN MILLIONS)

	For the six months ended December 31,						For the three months ended September 30,
	2019			2018			2020			2019
OPERATING ACTIVITIES
Net income	$	827		$	639		$	1,117		$	513

Adjustments to reconcile net income to cash (used in) provided by operating activities
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization		107			94			68			50
Amortization of cable distribution investments		14			19			5			9
Impairment and restructuring charges		9			-			35			9
Equity-based compensation		65			-			31			27
Other, net		(287	)		200			(519	)		15
Deferred income taxes		246			57			391			165
Change in operating assets and liabilities, net of acquisitions and dispositions
Receivables and other assets		(640	)		(587	)		(193	)		(110	)
Inventories net of program rights payable		(354	)		(168	)		(440	)		(358	)
Accounts payable and other liabilities		(243	)		(218	)

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

Accounts payable and accrued expenses								(62	)		(113	)
Other changes, net								(166	)		(5	)
Net cash provided by operating activities								267			202
INVESTING ACTIVITIES
Property, plant and equipment		(110	)		(88	)		(117	)		(39	)
Acquisitions, net of cash acquired		(260	)		-
Purchase of investments		-			(100	)		(31	)		0
Other investing activities, net		21			(63	)		(1	)		(1	)

Net cash used in investing activities		(349	)		(251	)		(149	)		(40	)

FINANCING ACTIVITIES
Net transfers to Twenty-First Century Fox, Inc.		-			(312	)
Repurchase of shares		(421	)		-			(267	)		0
Non-operating cash flows from (to) The Walt Disney Company								152			(41	)
Settlement of Divestiture Tax prepayment								462			0
Dividends paid and distributions		(169	)		(22	)		(15	)		(14	)
Other financing activities, net		(48	)		-			(34	)		(1	)

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

Net decrease in cash and cash equivalents		(1,243	)		(549	)
Net cash provided by (used in) financing activities								298			(56	)
Net increase in cash and cash equivalents								416			106
Cash and cash equivalents, beginning of year		3,234			2,500			4,645			3,234

Cash and cash equivalents, end of period	$	1,991		$	1,951		$	5,061		$	3,340

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

FOX CORPORATION

UNAUDITED CONSOLIDATED ~~AND COMBINED~~ STATEMENTS OF EQUITY

(IN MILLIONS)

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

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

Balance, June 30, 2019		354		$	4			266		$	3	$	-		$	9,891		$	357		$	(308	)		$	9,947		$	11		$	9,958
Balance, June 30, 2020																																			344		$	3		261		$	3	$	9,831		$	674		$	(417	)	$	10,094		$	17		$	10,111
Net income		-			-			-			-		-			-			799			-				799			16			815			-			0		-			0		0			1,106			0			1,106			7			1,113
Other comprehensive income		-			-			-			-		-			-			-			12				12			-			12			-			0		-			0		0			0			9			9			0			9
Dividends declared		-			-			-			-		-			-			(143	)		-				(143	)		-			(143	)		-			0		-			0		0			(138	)		0			(138	)		0			(138	)
Shares repurchased		(8	)		(1	)		(2	)		-		-			(194	)		(232	)		-				(427	)		-			(427	)		(7	)		0		(3	)		0		(161	)		(109	)		0			(270	)		0			(270	)
Other		1			-			-			-		-			152			(6	)		-				146			(8	)		138			1			0		0			0		(2	)		(8	)		0			(10	)		(9	)		(19	)
Balance, December 31, 2019		347		$	3			264		$	3	$	-		$	9,849		$	775		$	(296	)		$	10,334		$	19		$	10,353

Balance, June 30, 2018		-		$	-			-		$	-	$	9,513		$	-		$	-		$	81			$	9,594		$	-		$	9,594
Adoption of new accounting standards^(c)		-			-			-			-		143			-			-			(143	)			-			-			-
Balance, September 30, 2020																																			338		$	3		258		$	3	$	9,668		$	1,525		$	(408	)	$	10,791		$	15		$	10,806
Balance, June 30, 2019																																			354		$	4		266		$	3	$	9,891		$	357		$	(308	)	$	9,947		$	11		$	9,958
Net income		-			-			-			-		612			-			-			-				612			6			618			-			0		-			0		0			499			0			499			5			504
Other comprehensive income		-			-			-			-		-			-			-			3				3			-			3			-			0		-			0		0			0			4			4			0			4
Dividends declared																																			-			0		-			0		0			(143	)		0			(143	)		0			(143	)
Other		-			-			-			-		162			-			-			-				162			6			168			0			0		0			0		30			(17	)		0			13			(6	)		7
Net increase in Twenty-First Century Fox, Inc. investment		-			-			-			-		166			-			-			(143	)	^(b)		23			-			23
Balance, December 31, 2018		-		$	-			-		$	-	$	10,596		$	-		$	-		$	(202	)		$	10,394		$	12		$	10,406
Balance, September 30, 2019																																			354		$	4		266		$	3	$	9,921		$	696		$	(304	)	$	10,320		$	10		$	10,330

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

^(b)

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

⁽^c⁾

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

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

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

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

The ~~Distribution~~

~~On March~~ ~~19, 2019, the Company became a standalone publicly traded company through the pro rata distribution by Twenty-First Century Fox, Inc. (now known as TFCF Corporation) (“21CF”) of~~ all of the issued and outstanding common stock of FOX to 21CF stockholders (other than holders that were subsidiaries of 21CF) (the “Distribution”) in accordance with the Amended and Restated Distribution Agreement and Plan of Merger, dated as of June 20, 2018, by and between 21CF and 21CF Distribution Merger Sub, Inc. Following the Distribution, 354 million and 266 million shares of the Company’s Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”), and Class B Common Stock, par value $0.01 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”), respectively, began trading independently on The Nasdaq Global Select Market (“Nasdaq”). In connection with the Distribution, the Company entered into the Separation and Distribution Agreement, dated as of March 19, 2019 (the “Separation Agreement”), with 21CF, which effected the internal restructuring (the “Separation”) whereby 21CF transferred to FOX a portfolio of 21CF’s news, sports and broadcast businesses, including FOX News Media (consisting of FOX News and FOX Business), FOX ~~Entertainment~~, FOX Sports, FOX Television Stations, and sports cable networks FS1, FS2, FOX Deportes and Big Ten Network, and certain other assets, and FOX assumed from 21CF the liabilities associated with such businesses and certain other liabilities. The Separation and the Distribution were effected as part of a series of transactions contemplated by the Amended and Restated Merger Agreement and Plan of Merger, dated as of June 20, 2018, by and among 21CF, The Walt Disney Company (“Disney”) and certain subsidiaries of Disney, pursuant to which, among other things, 21CF became a wholly-owned subsidiary of Disney.

In connection with the Separation, the Company entered into several agreements that govern certain aspects of the Company’s relationship with 21CF and Disney following the Separation. These include the Separation Agreement, a tax matters agreement, a transition services agreement, as well as agreements relating to intellectual property licenses, employee matters, commercial arrangements and a studio lot lease (See Note 1—Description of Business and Basis of Presentation in the 2019 Form 10-K, as defined below, for further discussion).

~~Basis of Presentation~~

~~The~~accompanying Unaudited Consolidated ~~and Combined~~ Financial Statements of FOX have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments consisting only of normal recurring adjustments necessary for a fair presentation have been reflected in these Unaudited Consolidated ~~and Combined~~ Financial Statements. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2021, due to, among other things, the impact of coronavirus disease 2019 (“COVID-19”) on the Company’s business.

The preparation of the Company’s Unaudited Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts that are reported in the Unaudited Consolidated 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.

The outbreak of the COVID-19 pandemic has resulted in widespread and continuing negative impacts on the macroeconomic environment and disruption to the Company’s business. Weak economic conditions and increased volatility and disruption in the financial markets pose risks to the Company and its business partners, including advertisers whose expenditures tend to reflect overall economic conditions. The COVID-19 pandemic has caused some of the Company’s advertisers to reduce their spending, and future declines in the economic prospects of advertisers or the economy in general could negatively impact their advertising expenditures further. Depending on the duration and severity of the recession, it could lead to changes in consumer behavior, including increasing numbers of consumers canceling or foregoing subscriptions to multi-channel video programming distributor (“MVPD”) services, that adversely affect the Company’s affiliate fee and advertising revenues. In addition, the Company’s business depends on the volume and popularity of the content it distributes, particularly sports content. Following the COVID-19 outbreak, sports events to which the Company has broadcast rights have been cancelled or postponed and the production of certain entertainment content the Company distributes has been suspended. Although some of these sports events and productions have resumed, there may be additional content disruptions in the future. Depending on their duration and severity, these disruptions could materially adversely affect the Company’s future advertising revenues and, over a longer period, its future affiliate fee revenues. To the extent the pandemic further negatively impacts the Company’s ability to air sports events, particularly National Football League (“NFL”) and college sports, it could result in a significantly greater adverse effect on the Company’s business, financial condition or results of operations than the Company has experienced thus far. In addition, shifting sports schedules may negatively impact the Company’s ability to attract viewers and advertisers to its sports and entertainment programming.

The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the best estimates of the future impacts of COVID-19 as of September 30, 2020. The accounting matters assessed included, but were not limited to, the Company’s valuation allowances, programming rights and the carrying value of the goodwill and other long-lived assets. While there was not an impact to the Company’s consolidated financial statements as of September 30, 2020, the Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods.

These interim Unaudited Consolidated ~~and Combined~~ Financial Statements and notes thereto should be read in conjunction with the audited consolidated and combined financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019~~2020 as filed with the Securities and Exchange Commission on August ~~9, 2019~~10, 2020 (the ~~“2019~~“2020 Form 10-K”).

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

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS

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

~~For purposes of the Company’s financial statements for the period prior to the Distribution,~~the income tax provision in the Unaudited Combined Statements of Operations was calculated as if FOX filed a separate tax return and was operating as a standalone business. Therefore, cash tax payments and items of current and deferred taxes may not be reflective of FOX’s actual tax balances prior to or subsequent to the Distribution. Prior to the Distribution, the Company’s operating results were included in 21CF’s consolidated U.S. federal and state income tax returns.

~~Intercompany transactions with 21CF or its affiliates and the Company are reflected in the historical Unaudited Combined Financial Statements for the period prior to the Distribution.~~FOX. All significant ~~intracompany~~intercompany transactions and accounts within the Company’s consolidated ~~and combined~~ businesses have been eliminated. Investments in and advances to entities or joint ventures in which the Company has significant influence, but less than a controlling financial interest, are accounted for using the equity method. Significant influence is generally ~~presumed to exist~~exists when the Company owns an interest between 20% and 50% ~~and exercises significant influence.~~. In accordance with Accounting Standards Codification (“ASC”) 321 “Investments—Equity Securities” (“ASC 321”), equity securities in which the Company has no significant influence (generally less than a 20% ownership interest) with readily determinable fair values are accounted for at fair value based on quoted market prices. Equity securities without readily determinable fair values are accounted for either at fair value or using the measurement alternative 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 ~~and Combined~~ Statements of Operations.

Pursuant to the merger agreement relating to the merger of Twenty-First Century Fox, Inc. (“21CF”) and The ~~preparation~~Walt Disney Company (“Disney”), the Company made a prepayment of approximately $700 million which represented the Company’s share of the estimated tax liabilities resulting from the anticipated divestitures by Disney of certain assets (the “Divestiture Tax”), principally the FOX Sports Regional Sports Networks (“RSNs”). As of September 30, 2020, Disney had sold the RSNs, the Company and Disney reached an agreement to settle the majority of the prepaid Divestiture Tax and the Company received $462 million from Disney as reimbursement of the Company’s ~~Unaudited Consolidated and Combined Financial Statements~~prepayment based upon the sales price of the RSNs. This reimbursement was recorded in ~~conformity with GAAP requires management to make estimates and assumptions that affect the amounts that are reported~~Other, net in the ~~Unaudited Consolidated and Combined~~Statement of Operations (See Note 11—Additional Financial ~~Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge~~Informationunder the heading “Other, net”). The balance of ~~current events and actions that~~ the ~~Company may undertake~~prepaid Divestiture Tax is subject to adjustment in the future, ~~actual~~but any such adjustment is not expected to have a material impact on the results ~~may differ from those estimates.~~of the Company.

The Company’s fiscal year ends on June 30 of each year. Certain fiscal ~~2019~~2020 amounts have been reclassified to conform to the fiscal ~~2020~~2021 presentation.

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

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS~~

Recently Adopted and Recently Issued Accounting Guidance

Adopted

In ~~February~~June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ~~2016-02, “Leases~~(“ASU”) 2016-13, “Financial Instruments—Credit Losses (Topic ~~842)”~~326): Measurement of Credit Losses on Financial Instruments” (“~~Topic 842”~~ASU 2016-13”), as amended. ~~Topic 842 requires recognition of lease liabilities and right-of-use (“ROU”) assets on the balance sheet and disclosure of key information about leasing arrangements.~~ OnJuly 1, ~~2019,~~2020, the Company adopted ~~Topic 842~~ASU 2016-13 on a modified retrospective basis. The amendments in ASU 2016-13 require, among other things, financial assets measured at amortized cost basis ~~and recorded operating lease liabilities and ROU assets of approximately $635 million and $585 million, respectively,~~to be presented at the ~~date of adoption (See Note 7—Leases). The difference between the Company’s initial~~net amount expected to be collected as compared to previous GAAP which delayed recognition ~~of operating lease liabilities and ROU assets, at the date of adoption,~~until it was ~~primarily~~probable a ~~result of the reclassification of the deferred rent liability.~~loss had been incurred. The adoption of ~~Topic 842~~ASU 2016-13 did not have a material impact on the Company’s Financial Statements.

In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). OnJuly 1, 2020, the Company adopted ASU 2018-15 on a prospective basis. The amendments in ASU 2018-15 require implementation costs incurred in a hosting arrangement that is a service contract to be capitalized using the same guidance for capitalizing implementation costs incurred to develop or obtain internal-use software. In addition, ASU 2018-15 provides guidance regarding the term over which capitalized implementation costs are to be amortized and requires specific financial statement presentation and disclosures. The adoption of ASU 2018-15 did not have a material impact on the Company’s Financial Statements.

In March 2019, the FASB issued ASU 2019-02, “Entertainment—Films—Other Assets—Film Costs (Subtopic926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials” (“ASU2019-02”). OnJuly 1, 2020, the Company adopted ASU 2019-02 on a prospective basis and reclassified entertainment programming rights, with a contract duration of longer than a year, that were previously classified as the current portion of inventories, net to non-current inventories, net on the Balance Sheet. The amendments in ASU2019-02align the accounting treatment for production costs of episodic television series with the accounting treatment for production costs of films. In addition,

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

ASU 2019-02 modifies certain aspects of the amortization, impairment, presentation and disclosure requirements in ASC 926-20 and the impairment, presentation and disclosure requirements in ASC 920-350, including eliminating the balance sheet classification guidance. The adoption of ASU 2019-02 did not have a significant impact on the Company’s Financial Statements ~~of Operations. In accordance with the guidance in Topic 842, the Company elected not to reassess (i) whether any existing contracts are or contain leases, (ii) lease classification~~(See Note 3—Inventories, net for ~~existing leases or (iii) capitalization of initial direct costs for existing leases.~~additional information).

NOTE 2. ACQUISITIONS, DISPOSALS AND OTHER TRANSACTIONS

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

For the acquisitionsin Note 3—Acquisitions, Disposals and Other Transactions in the 2020 Form 10-K under the heading “Acquisitions and Disposals,

~~Television Stations Acquisition~~” the accounting for each business combination, including consideration transferred, is based on provisional amounts and ~~Divestiture~~

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

~~Credible Acquisition~~

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

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

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS~~

~~Other Transactions~~

~~The Stars Group~~

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

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

~~Caffeine~~certain assets and ~~Caffeine Studios~~

~~In the first quarter of fiscal 2019, the Company invested,~~liabilities. A change in the ~~aggregate, approximately $100 million~~allocation of consideration transferred and any estimates of useful lives could result in ~~cash for~~ a ~~minority equity interest~~change 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~~the value allocated to the intangible assets that ~~is jointly owned by the Company and Caffeine. The Company accounts for the investments in Caffeine~~ ~~using the measurement alternative in accordance with ASC 321~~ ~~and Caffeine Studios using the equity method.~~could impact future amortization expense.

NOTE 3. INVENTORIES, NET

In accordance with ASC 920, “Entertainment—Broadcasters” (“ASC 920”), costs incurred in acquiring program rights or producing programs for the Cable Network Programming and Television segments, including advances, are capitalized and amortized over the license period or projected useful life of the programming. Program rights and the related liabilities are recorded at the gross amount of the liabilities when the license period has begun, the cost of the program is determinable and the program is accepted and available for airing. Effective for the Company beginning on July 1, 2020, ASC 920 permits program rights to be recorded in non-current inventories, net rather than segregated between current and non-current inventories, net. As a result, the Company reclassified entertainment programming rights, with a contract duration of longer than a year, that were previously classified as the current portion of inventories, net to non-current inventories, net on the Balance Sheet. Advances on sports events expected to be broadcast within one year and programs with an initial license period of one year or less continue to be recorded in the current portion of inventories, net. Television broadcast network entertainment programming, which includes acquired series, co-produced series, movies and other programs, are amortized primarily on an accelerated basis.

The Company has single and multi-year contracts for broadcast rights of programs and sports events. The Company evaluates the recoverability of the unamortized costs associated therewith, using total estimated advertising and other revenues attributable to the program material and considering the Company’s expectations of the usefulness of the program rights. The recoverability of entertainment programming is generally assessed on a contract basis and the recoverability of certain sports rights contracts for content broadcast on the FOX Network and the sports channels is assessed on an aggregate basis. Where an evaluation indicates that these multi-year contracts will result in an asset that is not recoverable, amortization of rights is accelerated in an amount equal to the amount by which the unamortized costs exceed fair value. The costs of multi-year sports contracts at the FOX Network and the sports channels are primarily amortized based on the ratio of each current period’s attributable revenue for each contract to the estimated total remaining attributable revenue for each contract. Estimates can change and, accordingly, are reviewed periodically and amortization is adjusted as necessary. Such changes in the future could be material.

The Company’s inventories were comprised of the following:

	As of December 31, 2019			As of June 30, 2019			As of September 30, 2020			As of June 30, 2020
	(in millions)						(in millions)
Sports programming rights	$	1,275		$	954		$	1,098		$	674
Entertainment programming rights		467			380			428			384

Total inventories, net		1,742			1,334			1,526			1,058
Less: current portion of inventories, net		(1,544	)		(1,129	)		(1,271	)		(856	)

Total non-current inventories, net	$	198		$	205		$	255		$	202

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended September 30, 2020, the aggregate amortization expense related to the programming rights was approximately $670 million, which is included in Operating expenses in the Statement of Operations.

NOTE 4. FAIR VALUE

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

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS~~

The following tables present information about financial assets and liabilities carried at fair value on a recurring basis:

	Fair value measurements										Fair value measurements
	As of December 31, 2019										As of September 30, 2020
	Total			Level 1		Level 2		Level 3			Total			Level 1			Level 2		Level 3
	(in millions)										(in millions)
Assets
Investments in equity securities^(a)	$	1,132		$	806	$	326	$	-		$	640		$	640	^(a)	$	0	$	0
Liabilities
Other		3			3		-		-			(4	)		0			0		(4)	^(b)
Liabilities
Other^(b)		(6	)		-		-		(6	)
Redeemable noncontrolling interests^(b)		(216	)		-		-		(216	)

Redeemable noncontrolling interests												(310	)		0			0		(310)	^(b)
Total	$	913		$	809	$	326	$	(222	)	$	326		$	640		$	0	$	(314)

	Fair value measurements										Fair value measurements
	As of June 30, 2019										As of June 30, 2020
	Total			Level 1		Level 2		Level 3			Total			Level 1			Level 2		Level 3
	(in millions)										(in millions)
Assets
Investments in equity securities^(a)	$	761		$	545	$	216	$	-		$	531		$	531	^(a)	$	0	$	0
Redeemable noncontrolling interests^(b)		(189	)		-		-		(189	)

Liabilities
Other												(6	)		0			0		(6)	^(b)
Redeemable noncontrolling interests												(305	)		0			0		(305)	^(b)
Total	$	572		$	545	$	216	$	(189	)	$	220		$	531		$	0	$	(311)

^(a)(^a⁾

The investment categorized as Level 1 represents an investment in equity securities of ~~Roku, Inc.~~Flutter Entertainment plc (“Flutter”) with a readily determinable fair value. The investment categorized as Level 2 represents an investment in equity securities of The Stars Group estimated using the quoted market price of The Stars Group common stock less a discount due to a lack of marketability (“DLOM”). The DLOM was derived based on the remaining term of the lock up period and the volatility of The Stars Group common stockvalue (See Note 2—3—Acquisitions, Disposals and Other Transactions in the 2020 Form 10-K under the heading ~~“The Stars Group”~~“Flutter” for further discussion).

⁽^b⁾

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

Redeemable Noncontrolling Interests

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

109

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS

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

	For the three months ended December 31,							For the six months ended December 31,								For the three months ended September 30,
	2019				2018			2019				2018				2020			2019
	(in millions)															(in millions)
Beginning of period	$	(207	)		$	(83	)	$	(189	)		$	(275	)		$	(305	)	$	(189	)
Acquisitions^(a)		(109	)			-			(109	)			-
Net income		(3	)			(10	)		(12	)			(21	)			(4	)		(9	)
Distributions		5				6			13				19				6			8
Accretion and other		98		^(b)		(19	)		81		^(b)		171		^(c)
						-
Accretion																	(7	)		(17	)
End of period	$	(216	)		$	(106	)	$	(216	)		$	(106	)		$	(310	)	$	(207	)

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

⁽^b⁾

~~As a result of the expiration of a portion of the put rights~~

As of September 30, 2020, a portion of the sports network minority shareholder’s put right was exercisable. In October 2020, the sports network minority shareholder exercised its put right to sell this portion of its interest to the Company for approximately $135 million. The final put right held by the sports network minority shareholder ~~during the three months ended December 31, 2019, approximately $120 million was reclassified into equity.~~

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

~~Another portion of the put rights held by the sports network minority shareholder will become exercisable in July 2020 and the remaining portion~~ will become exercisable in July 2021. The put right held by the Credible minority shareholder will become exercisable in fiscal ~~year~~ 2025.

Financial Instruments

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

	As of December 31, 2019		As of June 30, 2019		As of September 30, 2020		As of June 30, 2020
	(in millions)				(in millions)
Borrowings

Fair value	$	7,879	$	7,643	$	9,709	$	9,746

Carrying value	$	6,753	$	6,751	$	7,947	$	7,946

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

Concentrations of Credit Risk

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

The Company’s receivables did 0t represent significant concentrations of credit risk as of September 30, 2020 or June 30, 2020. Generally, the Company does not require collateral to secure receivables. As of ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019,~~2020, the Company had 0 individual customers that accounted for 10% or more of the Company’s receivables.

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS~~

NOTE 5. ~~GOODWILL AND INTANGIBLE ASSETS, NET~~BORROWINGS

~~The changes in the carrying values of the Company’s intangible assets and related accumulated amortization were as follows:~~

Intangible assets not subject to amortization

FCC
licenses

Other

Total

Amortizable intangible assets, net^(a)

Total
intangible
assets,
net

(in millions)

Balance, June 30, 2019

$
2,167

$
642

$
2,809

$
42

$
2,851

Amortization

-

-

-

(13
)

(13
)
Acquisitions^(b)

-

-

-

73

73

Balance, December 31, 2019

$
2,167

$
642

$
2,809

$
102

$
2,911

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

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

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

Cable Network Programming

Television

Other, Corporate and Eliminations

Total Goodwill

(in millions)

Balance, June 30, 2019

$
987

$
1,704

$
-

$
2,691

Acquisitions^(a)

42

36

222

300

Balance, December 31, 2019

$
1,029

$
1,740

$
222

$
2,991

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

~~NOTE 6. BORROWINGS~~Senior Notes Issued

Borrowings include senior notes (See Note 9—Borrowings in the ~~2019~~2020 Form 10-K under the heading ~~“Senior~~“Public Debt – Senior Notes ~~Issued Under the January 2019 Indenture”~~Issued”). In addition, the Company is party to a credit agreement providing a $1.0 billion unsecured revolving credit facility with a sub-limit of $150 million available for the issuance of letters of credit and a maturity date of March 2024 (See Note 9—Borrowings in the ~~2019~~2020 Form 10-K under the heading “Revolving Credit Agreement”). As of ~~December 31, 2019,~~September 30, 2020, there were 0 borrowings outstanding under the revolving credit ~~agreement.~~agreement.

~~NOTE7. LEASES~~

~~Lessee Arrangements~~

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

For operating leases that have a lease term of greater than one year, the Company initially recognizes operating lease liabilities and ROU assets at the lease commencement date, which is the date that the lessor makes an underlying asset available for use by the Company. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the present value of the Company’s obligation to make lease payments, primarily escalating fixed payments, over the lease term. The discount rate used to determine the present value of the lease payments is generally the Company’s incremental borrowing rate because the rate implicit in the lease is generally not readily determinable. The incremental borrowing rate for the lease term is determined by adjusting the Company’s unsecured borrowing rate for a similar term to approximate a collateralized borrowing rate. The Company's lease terms for each of its leases represents the noncancelable period for which the Company has the right to use an underlying asset,

1210

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS

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

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

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

As of December 31, 2019

(in millions)

ROU assets
$
533

Lease liabilities

Current lease liabilities
$
142

Non-current lease liabilities

429

Total lease liabilities
$
571

Other supplemental information

Weighted average remaining lease term
7 years

Weighted average discount rate

3
%

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

For the three months ended December 31, 2019

For the six months ended December 31, 2019

(in millions)

Lease costs

Total lease costs^(a)

$
31

$
61

Supplemental cash flows information

Operating cash flows from operating leases

$
43

$
81

^(a)	Total lease costs of $31 million and $61 million for the three and six months ended December 31, 2019, respectively, are net of sublease income of approximately $15 million and $25 million, respectively.

~~The following table presents the lease payments relating to the Company’s operating leases:~~

As of December 31, 2019

(in millions)

Fiscal Year

2020
$
80

2021

126

2022

91

2023

86

2024

82

Thereafter

194

Total lease payments^(a)

659

Less: imputed interest

(88
)

Present value of operating lease liabilities
$
571

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

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS~~

~~Lessor Arrangements~~

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

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

NOTE 8.6. STOCKHOLDERS’ EQUITY

Stock Repurchase Program

~~On November 6, 2019,~~In fiscal 2020, the ~~Company announced that its~~Company’s Board of Directors (the “Board”) ~~had~~ authorized a stock repurchase program providing for the repurchase of $2 billion of the Company’s Class A Common ~~Stock.~~Stock, par value $0.01 per share (the “Class A Common Stock”), and Class B Common Stock, par value $0.01 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”). The program has no time limit and may be modified, suspended or discontinued at any time. ~~The~~In August 2020, the Company ~~also announced that it had~~ entered into an2 accelerated share repurchase (“ASR”) ~~agreement~~agreements to repurchase ~~$350~~$154 million of Class A Common Stock and ~~announced its intention to promptly repurchase $150~~$66 million of Class B Common Stock.

In accordance with the ASR ~~agreement~~agreements, in ~~November 2019,~~August 2020, the Company paid a third-party financial institution ~~$350~~$154 million and $66 million and received an initial ~~delivery~~deliveries of approximately 84.7 million and 2.0 million shares of Class A Common Stock and Class B Common Stock, respectively, representing 80% of the shares expected to be repurchased under ~~the~~each ASR agreement, at a price of ~~$34.99~~$26.00 and $26.01 per share, which was ~~the~~ The Nasdaq Global Select Market closing share price of the Class A Common Stock and Class B Common Stock, respectively, on ~~November 11, 2019.~~August 21, 2020. Upon settlement of the ASR ~~agreement~~agreements in ~~January~~September 2020, the Company received a final ~~delivery~~deliveries of approximately 20.9 million and 0.4 million shares of Class A Common ~~Stock.~~Stock and Class B Common Stock, respectively. The final number of shares purchased under the ASR ~~agreement~~agreements was determined using a price of ~~$36.05~~$27.57 and $27.67 per share (the volume-weighted average market price of the Class A Common Stock and Class B Common Stock, respectively, during the ~~term~~terms of the ASR ~~agreement~~agreements less a ~~discount)~~discount applicable for the Class A Common Stock). The Company accounted for ~~the~~each ASR agreement as two separate transactions. The initial ~~delivery~~deliveries of Class A Common Stock ~~was~~and Class B Common Stock were accounted for as a treasury stock ~~transaction~~transactions recorded on the acquisition date. The final ~~settlement~~settlements of Class A Common Stock ~~was~~and Class B Common Stock were accounted for as a forward ~~contract~~contracts indexed to the Class A Common Stock or Class B Common Stock, as applicable, and qualified as an equity ~~transaction.~~transactions.

In addition to the shares purchased under the ASR agreements, the Company repurchased shares of Class A Common Stock and Class B Common Stock in the open market. In total, the Company repurchased approximately 210 million shares of ~~Class B~~ Common Stock for ~~$77~~$270 million during the three months ended December 31, 2019. Subsequent to December 31, 2019, the Company repurchased $73 million of Class B Common Stock to achieve the intended repurchase of $150 million of Class B Common Stock announced on November 6, 2019.September 30, 2020.

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

As of ~~December 31, 2019,~~September 30, 2020, the Company’s remaining stock repurchase authorization was approximately ~~$1.6~~$1.1 billion.

~~Stockholders Agreement~~

~~The Company also announced on November 6, 2019 that it had entered into a stockholders agreement with the Murdoch Family Trust pursuant~~ Subsequent to ~~which~~September 30, 2020, the Company ~~and the Murdoch Family Trust have agreed not to take actions that would result~~repurchased a total of approximately 1.3 million shares of Common Stock for approximately $35 million in the Murdoch Family Trust and Murdoch family members together owning more than 44% of the outstanding voting power of the shares of Class B Common Stock or would increase the Murdoch Family Trust’s voting power by more than 1.75% in any rolling twelve-month period. The Murdoch Family Trust would forfeit votes to the extent necessary to ensure that the Murdoch Family Trust and the Murdoch family collectively do not exceed 44% of the outstanding voting power of the Class B shares, except where a Murdoch family member votes their own shares differently from the Murdoch Family Trust on any matter.

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS~~

~~Temporary Stockholder Rights Plan~~

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

Dividends

The following table summarizes the dividends declared per share on both the Company’s Class A Common Stock and Class B Common Stock:

For the three months ended December 31,

For the six months ended December 31,

2019

2018

2019

2018

Cash dividend per share

$
-

$
-

$
0.23

$
-

For the three months ended

September 30,

2020

2019

Cash dividend per share

0.23

~~Subsequent to December 31, 2019, the~~The Company declared a semi-annual dividend of $0.23 per share on both the Class A Common Stock and the Class B Common ~~Stock. The dividend declared is payable~~Stock during the three months ended September 30, 2020, which was paid in October 2020 to stockholders of record on ~~April 1, 2020 with a record date for determining dividend entitlements of March 4,~~September 2, 2020.

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9.7. EQUITY-BASED COMPENSATION

~~In connection with the Distribution,~~ As of September 30, 2020, the Company ~~adopted~~has 1 equity plan, the Fox Corporation 2019 Shareholder Alignment Plan (the “SAP”)~~, under which~~ (See Note 12—Equity-Based Compensation in the 2020 Form 10-K).

The following table summarizes the Company’s equity-based ~~compensation, including stock options, stock appreciation rights, restricted and unrestricted stock,~~ ~~restricted stock units (“RSUs”), performance stock units (“PSUs”)~~ ~~and other types of FOX equity awards may be granted.~~ compensation:

	For the three months ended September 30,
	2020		2019
	(in millions)
Equity-based compensation	$	31	$	32
Intrinsic value of all settled equity-based awards	$	81	$	3
Tax benefit on settled equity-based awards	$	14	$	0

The Company’s ~~officers, directors and employees are eligible to participate in the SAP.~~

~~Performance Stock Units~~

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

~~During the six months ended December 31, 2019, approximately 1.4 million PSUs were granted, which have a three-year performance measurement period beginning in July 2019. The~~ awards are ~~subject to the achievement of three pre-established objective performance measures determined by the Compensation Committee of the Board. The awards issued will be~~ settled in ~~shares of~~ Class A Common ~~Stock upon vesting~~Stock. As of September 30, 2020, the Company’s total estimated compensation cost, not yet recognized, related to non-vested equity awards held by the Company’s employees was approximately $190 million and ~~are subject~~is expected to the participants’ continued employment with the Company. Any person who holds PSUs shall have no ownership interest in the shares of Class A Common Stock to which such PSUs relate until and unless shares of Class A Common Stock are delivered to the holder. All shares of Class A Common Stock awards that are cancelled or forfeited become available for future grants. Certain of these awards have a graded vesting provision and the expense recognition is accelerated.

~~Restricted Stock Units~~

~~During the six months ended December 31, 2019, approximately 1.1 million RSUs were granted, which vest in equal annual installments~~be recognized over a ~~three-year~~weighted average period ~~subject to the participants’ continued employment with the Company.~~between one and two years.

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS~~

~~Stock Options~~

~~During the six months ended December 31, 2019, approximately 3.8 million stock options were granted, which generally have a term of seven years and vest in equal annual installments over a~~ ~~three-year~~ ~~period subject to the participants’ continued employment with the Company.~~ As of ~~December 31,~~September 30, 2020 and 2019, the Company had approximately 7 million and 4 million stock options ~~outstanding.~~outstanding, respectively. For the three ~~and six~~ months ended ~~December 31,~~September 30, 2020 and 2019, the computation of diluted earnings per share did not include most of the stock options outstanding during these periods, because their inclusion would have been antidilutive.

~~The following table summarizes~~Awards Granted and Vested

Restricted Stock Units

During the ~~Company’s equity-based compensation:~~three months ended September 30, 2020, approximately 1.9 million restricted stock units (“RSUs”) were granted, which vest in equal annual installments over a three-year period subject to the participants’ continued employment with the Company, and 3.1 million RSUs vested.

Performance-Based Stock Options

For the three months ended December 31,

For the six months ended December 31,

2019

2018

2019

2018

(in millions)

Equity-based compensation^(a)

$
42

$
12

$
74

$
33

Intrinsic value of all settled equity-based awards

$
3

$
8

$
6

$
110

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

~~The Company’s~~Performance-based stock ~~based~~options (“PSOs”) are awards ~~are settled in~~that entitle the holder to purchase a specified number of shares of Class A Common ~~Stock. As~~Stock at a specified price for a specified period of ~~December 31, 2019,~~time, contingent on the performance of the Class A Common Stock over a three-year period, subject to the terms and conditions of the SAP, the applicable award documents and such other terms and conditions as the Compensation Committee of the Board may establish. The PSOs granted under the SAP will vest in full only if the Company’s ~~total estimated compensation~~Class A Common Stock exceeds the exercise price of the PSO by a certain threshold over a certain period of time during the performance period (the “market condition”). The PSOs were fair valued using a Monte Carlo simulation model that uses the following assumptions: (i) expected volatility; (ii) expected term; (iii) risk-free interest rate; and (iv) expected dividend yield.Compensation cost ~~not yet recognized,~~ related to ~~non-vested equity awards held by~~ the ~~Company’s employees was approximately $205 million and is expected to~~PSO will be recognized ~~over a weighted average period between one and two years.~~even if the market condition is not met.

~~NOTE 10. RELATED PARTY TRANSACTIONS AND TWENTY-FIRST CENTURY FOX, INC. INVESTMENT~~

~~Related Party Transactions~~

InDuring the ~~ordinary course of business,~~three months ended September 30, 2020, the Company ~~enters into transactions with related parties,~~granted approximately 5.0 million PSOs, which ~~prior to the Distribution included subsidiaries and equity affiliates of 21CF.~~

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

For the three months ended December 31, 2018

For the six months ended December 31, 2018

(in millions)

Related party revenue

$
107

$
178

Related party expense

(3
)

(34
)

Related party revenue, net of expense

$
104

$
144

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

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

Prior to the Distribution, 21CF 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 were provided on a centralized basis within 21CF and not recordedfull at the business unit level, such as certain expenses related to finance, legal, insurance, information technology, compliance and human resources management activities, among others (“General Corporate Expenses”). For purposesend of the Unaudited Combined Financial Statements for the three and six months ended December 31, 2018, the General Corporate Expenses have been allocated to the Company. The General Corporate Expenses are included in the Unaudited Combined Statements of Operations in Selling, general and administrative expenses and Other, net, as appropriate. These expenses have been allocated to the Company on the basis of direct usage when identifiable, with the

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS~~

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

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

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

For the three months ended December 31, 2018

For the six months ended December 31, 2018

(in millions)

Cash pooling, general financing activities and other^(a)

$
(594
)

$
(14
)
Corporate allocations

95

180

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

$
(499
)

$
166

^(a)	The nature of activities included in the line item ‘Cash pooling, general financing activities and other’ includes financing activities, capital transfers, cash sweeps, other treasury services and Direct Corporate Expenses.

NOTE ~~11.~~8. COMMITMENTS AND CONTINGENCIES

Commitments

The Company has commitments under certain firm contractual arrangements (“firm commitments”) to make future payments. These firm commitments secure the future rights to various assets and services to be used in the normal course of operations. The total firm commitments and future debt payments as of ~~December 31, 2019 and June~~September 30, ~~2019 were approximately $37 billion and $41 billion, respectively. The decrease~~2020 have not changed significantly from ~~June 30, 2019 was primarily due to sports programming rights payments.~~

~~The commitments above do not include obligations and commitments related to the pending transaction disclosed in Note 2—Acquisitions, Disposals and Other Transactions.~~

~~Contingencies~~

~~Profits Participants Litigation~~

In November 2015, Wark Entertainment, Inc., Temperance Brennan, L.P., Snooker Doodle Productions, Inc., and Bertha Blue, Inc. filed lawsuits against 21CF, Fox Entertainment Group, Twentieth Century Fox Film Corporation, Twentieth Century Fox Television (“TCFTV”), and Fox Broadcasting Corporationdisclosures included in the ~~Superior Court of Los Angeles. The plaintiffs are profits participants in the~~ ~~Bones~~ television series and alleged that TCFTV, which produced the show, breached its contracts with the plaintiffs and committed fraud concerning certain of those contracts, and that 21CF, Fox Entertainment Group, and Fox Broadcasting Corporation induced TCFTV’s breach of contract and intentionally interfered with the plaintiffs’ contracts with TCFTV. During the quarter ended September 30, 2019, the parties amicably resolved the lawsuits, and the Company contributed $34 million pursuant to a settlement agreement with the plaintiffs and The Walt Disney Company as successor to 21CF, Fox Entertainment Group, Twentieth Century Fox Film Corporation, and TCFTV.2020 Form 10-K.

1712

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS

Profits participation litigation is subject to uncertainty and it is possible that there could be adverse developments in pending or future cases that could involve a FOX subsidiary. As of December 31, 2019, the Company does not believe that it has incurred a probable material loss for any other activities.Contingencies

FOX News

The ~~Company~~Company’s FOX News business and certain of its current and former employees have been subject to allegations of sexual harassment and discrimination on the basis of sex and ~~racial discrimination relating to alleged misconduct at the Company’s FOX News business.~~race. 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 material, individually or in the aggregate, ~~material~~ to the Company. The amount of additional liability, if any, that may result from these or related matters cannot be estimated at this time. However, the Company does not currently anticipate that the ultimate resolution of any such pending matters will have a material adverse effect on its business, financial condition, results of operations or cash flows.

U.K. Newspaper Matters Indemnity

In connection with the separation of 21CF and News Corporation in June 2013 (the “21CF News Corporation Separation”), 21CF agreed to indemnify News Corporation, on an after-tax basis, for payments made after the ~~separation~~21CF News Corporation 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 before the 21CF News Corporation Separation, 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 (as defined in Note 1—Description of Business and Basis of Presentation in the 2020 Form 10-K under the heading “The Distribution”), the Company assumed certain costs and liabilities related to the U.K. Newspaper Matters ~~Indemnity were assumed by the Company.~~Indemnity. The liability recorded in the Balance Sheets related to the indemnity was approximately $60 million and ~~$50~~$65 million as of ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019,~~2020, respectively.

Other

The Company establishes an accrued liability for legal claims and indemnification claims when the Company determines that a loss is both probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters. Any fees, expenses, fines, penalties, judgments or settlements which might be incurred by the Company in connection with the various proceedings could affect the Company’s results of operations and financial condition. For the contingencies disclosed above for which there is at least a reasonable possibility that a loss may be incurred, other than the accrual provided, the Company was unable to estimate the amount of loss or range of loss.

The Company’s operations are subject to tax in various domestic jurisdictions and as a matter of course, the Company is regularly audited by federal and state tax authorities. The Company believes it has appropriately accrued for the expected outcome of all pending tax matters and does not currently anticipate that the ultimate resolution of pending tax matters will have a material adverse effect on its consolidated financial condition, future results of operations or liquidity. Each member of the 21CF consolidated group, which includes 21CF, the Company (prior to the ~~Distribution)~~Distribution (as defined in Note 1—Description of Business and Basis of Presentation in the 2020 Form 10-K under the heading “The Distribution”)) and 21CF’s other subsidiaries, is jointly and severally liable for the U.S. federal incomeand, in certain jurisdictions, state tax liabilities of each other member of the consolidated group. Consequently, the Company could be liable in the event any such liability is incurred, and not discharged, by any other member of the 21CF consolidated group. The tax matters agreement requires 21CF and/or Disney to indemnify the Company for any such liability. Disputes or assessments could arise during future audits by the Internal Revenue Service in amounts that the Company cannot quantify.

NOTE ~~12.~~9. PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company participates in and/or sponsors various pension, savings and postretirement benefit plans. Pension plans and postretirement benefit plans are closed to new participants with the exception of a small group covered by collective bargaining agreements. The net periodic benefit cost was ~~$13~~$17 million and $14 million for the three months ended ~~December 31,~~September 30, 2020 and 2019, ~~and 2018, respectively, and $27 million for the six months ended December 31, 2019 and 2018.~~respectively.

1813

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS

NOTE ~~13.~~10. SEGMENT INFORMATION

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

•

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

•

Television, which principally consists of the acquisition, marketing and distribution of broadcast network programming nationally under the FOX brand and the operation of 2829 full power broadcast television stations, including 11 duopolies, in the U.S. Of these stations, 1718 are affiliated with the FOX Network, 10 are affiliated with MyNetworkTV and 1 is an independent station. The Television segment also includes Tubi, Inc., a free advertising-supported video-on-demand (“AVOD”) service.

•

Other, Corporate and Eliminations, which principally consists of the FOX Studio Lot, Credible, corporate overhead costs and intracompany ~~eliminations, the FOX Studios lot and Credible.~~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. Credible is a U.S. consumer finance marketplace.

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

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

1914

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS

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

	For the three months ended December 31,						For the six months ended December 31,						For the three months ended September 30,
	2019			2018			2019			2018			2020			2019
	(in millions)												(in millions)
Revenues
Cable Network Programming	$	1,469		$	1,434		$	2,754		$	2,699		$	1,325		$	1,285
Television		2,266			2,149			3,622			3,426			1,350			1,356
Other, Corporate and Eliminations		43			-			69			(1	)		42			26

Total revenues	$	3,778		$	3,583		$	6,445		$	6,124		$	2,717		$	2,667
Segment EBITDA
Cable Network Programming	$	556		$	519		$	1,240		$	1,152		$	781		$	684
Television		(214	)		(14	)		37			157			457			251
Other, Corporate and Eliminations		(81	)		(60	)		(160	)		(103	)		(72	)		(79	)
Amortization of cable distribution investments		(5	)	(9		)		(14	)		(19	)		(5	)		(9	)
Depreciation and amortization		(57	)		(51	)		(107	)		(94	)		(68	)		(50	)
Impairment and restructuring charges		-			-			(9	)		-			(35	)		(9	)
Interest expense		(90	)		(15	)		(180	)		(31	)		(99	)		(90	)
Interest income		8			-			25			-			1			17
Other, net		302			(339	)		287			(200	)		519			(15	)

Income before income tax expense		419			31			1,119			862			1,479			700
Income tax expense		(105	)		(7	)		(292	)		(223	)		(362	)		(187	)

Net income		314			24			827			639			1,117			513
Less: Net income attributable to noncontrolling interests		(14	)		(16	)		(28	)		(27	)		(11	)		(14	)

Net income attributable to Fox Corporation stockholders	$	300		$	8		$	799		$	612		$	1,106		$	499

Revenues by Segment by Component

	For the three months ended December 31,				For the six months ended December 31,					For the three months ended September 30,
	2019		2018		2019		2018			2020		2019
	(in millions)									(in millions)
Cable Network Programming
Affiliate fee	$	957	$	938	$	1,896	$	1,877		$	973	$	939
Advertising		337		353		591		617			299		254
Other		175		143		267		205			53		92

Total Cable Network Programming revenues		1,469		1,434		2,754		2,699			1,325		1,285
Television
Advertising		1,673		1,634		2,460		2,433			670		787
Affiliate fee		479		407		934		805			560		455
Other		114		108		228		188			120		114

Total Television revenues		2,266		2,149		3,622		3,426			1,350		1,356
Other, Corporate and Eliminations		43		-		69		(1	)		42		26

Total revenues	$	3,778	$	3,583	$	6,445	$	6,124		$	2,717	$	2,667

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS~~

Future Performance Obligations

As of ~~December 31, 2019,~~September 30, 2020, approximately $4$5.1 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~~content licensing 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

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

are in the form of sales- or usage-based royalties and (iii) revenues related to performance obligations for which the Company elects to recognize revenue in the amount it has a right to invoice.

	For the three months ended December 31,				For the six months ended December 31,				For the three months ended September 30,
	2019		2018		2019		2018		2020		2019
	(in millions)								(in millions)
Depreciation and amortization
Cable Network Programming	$	16	$	12	$	29	$	23	$	13	$	13
Television		14		26		29		52		25		15
Other, Corporate and Eliminations		27		13		49		19		30		22

Total depreciation and amortization	$	57	$	51	$	107	$	94	$	68	$	50

	As of December 31, 2019		As of June 30, 2019		As of September 30, 2020		As of June 30, 2020
	(in millions)				(in millions)
Assets
Cable Network Programming	$	2,721	$	2,584	$	2,622	$	2,591
Television		7,767		6,598		7,703		7,054
Other, Corporate and Eliminations		8,734		9,462		11,417		11,487
Investments		1,228		865		755		618

Total assets	$	20,450	$	19,509	$	22,497	$	21,750

As of
December 31,
2019

As of
June 30,
2019

(in millions)

Goodwill and intangible assets, net

Cable Network Programming

$
1,286

$
1,246

Television

3,922

3,891

Other, Corporate and Eliminations

694

405

Total goodwill and intangible assets, net

$
5,902

$
5,542

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS~~

NOTE ~~14.~~11. ADDITIONAL FINANCIAL INFORMATION

Impairment and Restructuring Charges

Impairment and restructuring charges were $35 million and $9 million for the three months ended September 30, 2020 and 2019, respectively. The impairment and restructuring charges for the three months ended September 30, 2020 and 2019 were primarily comprised of severance costs principally at the Cable Network Programming segment.

Other, net

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

For the three months ended December 31,

For the six months ended December 31,

2019

2018

2019

2018

(in millions)

Unrealized gains (losses) on investments^(a)

$
328

$
(255
)

$
371

$
(72
)
U.K. Newspaper Matters Indemnity^(b)

(31
)

(21
)

(44
)

(30
)
Transaction costs^(c)

2

(38
)

(43
)

(78
)
Other

3

(25
)

3

(20
)

Total other, net

$
302

$
(339
)

$
287

$
(200
)

	For the three months ended September 30,
	2020			2019
	(in millions)
Transaction costs^(a)	$	451		$	(45	)
Net gains on investments in equity securities^(b)		121			49
Other		(53	)		(19	)
Total other, net	$	519		$	(15	)

^(a)

~~Represents~~The transaction costs for the ~~net unrealized~~three months ended September 30, 2020 are primarily related to the partial settlement from Disney of $462 million related to the reimbursement of the Company’s prepayment of its share of the Divestiture Tax (See Note 1—Description of Business and Basis of Presentation). The transaction costs for the three months ended September 30, 2019 are primarily related to costs associated with the profits participants litigation (See Note 14—Commitments and Contingencies in the 2020 Form 10-K under the heading “Profits Participants Litigation”) and the Separation and the Distribution (See Note 1—Description of Business and Basis of Presentation in the 2020 Form 10-K under the heading “The Distribution”) and included retention related costs.

⁽^b⁾

Net gains ~~(losses)~~on investments in equity securities for the three months ended September 30, 2020 included the gain related to the change in fair value of the Company’s investment in Flutter (See Note 4—Fair Value) and for the three months ended September 30, 2019 included the gains related to the changes in fair value of the Company’s investments in ~~equity securities which are recognized~~Roku, Inc. and The Stars Group Inc. (See Note 6—Fair Value in the ~~Statements of Operations~~ ~~in accordance with ASC 321 (See~~ ~~Note 4—Fair Value)~~2020 Form 10-K).

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

^(c)

The transaction costs for the three and six months ended December 31, 2019 and 2018 are primarily related to the Separation and the Distribution and include retention related costs and for the six months ended December 31, 2019 also includes costs associated with the profits participants litigation (See Note 11—Commitments and Contingencies under the heading “Profits Participants Litigation”). The transaction costs for the three months ended December 31, 2019 were offset by an adjustment to the receivables from Disney pursuant to the Separation and Distribution Agreement.

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Other Non-Current Assets

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

	As of December 31, 2019		As of June 30, 2019		As of September 30, 2020		As of June 30, 2020
	(in millions)				(in millions)
Investments^(a)	$	1,228	$	865	$	755	$	618
Operating lease ROU assets		533		-		505		539
Grantor Trust						260		247
Inventories, net		198		205		255		202
Other^(b)		463		455

Other						165		195
Total other non-current assets	$	2,422	$	1,525	$	1,940	$	1,801

^(a)	~~Includes~~Included investments accounted for at fair value on a recurring basis of ~~$1.1 billion~~$640 million and ~~$761~~$531 million as of ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019,~~2020, respectively (See Note 4—Fair Value).

^(b)	Includes $253 million and $249 million of assets in the Grantor Trust (as defined in Note 14—Pension and Other Postretirement Benefits in the 2019 Form 10-K) as of December 31, 2019 and June 30, 2019, respectively.

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS~~

Accounts Payable, Accrued Expenses and Other Current Liabilities

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

	As of December 31, 2019		As of June 30, 2019		As of September 30, 2020		As of June 30, 2020
	(in millions)				(in millions)
Accrued expenses	$	832	$	835	$	871	$	907
Program rights payable		535		514		524		485
Deferred revenue		158		169		242		152
Operating lease liabilities		142		-		104		122
Other current liabilities		149		194		271		240

Total accounts payable, accrued expenses and other current liabilities	$	1,816	$	1,712	$	2,012	$	1,906

Other Liabilities

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

	As of December 31, 2019		As of June 30, 2019		As of September 30, 2020		As of June 30, 2020
	(in millions)				(in millions)
Accrued non-current pension/postretirement liabilities	$	547	$	543	$	710	$	709
Non-current operating lease liabilities		429		-		432		452
Other non-current liabilities		336		356		280		321

Total other liabilities	$	1,312	$	899	$	1,422	$	1,482

Supplemental Cash Flows Information

For the six months ended December 31,

2019

2018

(in millions)

Supplemental cash flows information

Cash paid for interest

$
(191
)

$
(29
)

Cash paid for income taxes

$
(35
)

$
-

Supplemental information on acquisitions

Fair value of assets acquired, excluding cash

$
404

$
-

Cash acquired

15

-

Liabilities assumed

(35
)

-

Noncontrolling interests

(109
)

-

Cash paid

(275
)

-

Fair value of equity instruments consideration

$
-

$
-

	For the three months ended September 30,
	2020			2019
	(in millions)
Cash paid for interest	$	(169	)	$	(171	)
Cash paid for income taxes	$	(86	)	$	(6	)

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Readers should carefully review this document and the other documents filed by Fox Corporation (“FOX” or the “Company”) with the Securities and Exchange Commission (the “SEC”). This section should be read together with the unaudited interim consolidated ~~and combined~~ financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019~~2020 as filed with the SEC on August ~~9, 2019~~10, 2020 (the ~~“2019~~“2020 Form 10-K”). The unaudited consolidated financial statements are referred to as the “Financial Statements” herein.

INTRODUCTION

~~The Distribution~~

~~On March~~ ~~19, 2019, Fox Corporation~~ ~~(“FOX” or the “Company”)~~ became a standalone publicly traded company through the pro rata distribution by Twenty-First Century Fox, Inc. (now known as TFCF Corporation) (“21CF”) of all of the issued and outstanding common stock of FOX to 21CF stockholders (other than holders that were subsidiaries of 21CF) (the “Distribution”) in accordance with the Amended and Restated Distribution Agreement and Plan of Merger, dated as of June 20, 2018, by and between 21CF and 21CF Distribution Merger Sub, Inc. Following the Distribution, 354 million and 266 million shares of the Company’s Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”), and Class B Common Stock, par value $0.01 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”), respectively, began trading independently on The Nasdaq Global Select Market. In connection with the Distribution, the Company entered into the Separation and Distribution Agreement, dated as of March 19, 2019 (the “Separation Agreement”), with 21CF, which effected the internal restructuring (the “Separation”) whereby 21CF transferred to FOX a portfolio of 21CF’s news, sports and broadcast businesses, including FOX News Media (consisting of FOX News and FOX Business), ~~FOX~~ ~~Entertainment~~, FOX Sports, FOX Television Stations, and sports cable networks FS1, FS2, FOX Deportes and Big Ten Network, and certain other assets, and FOX assumed from 21CF the liabilities associated with such businesses and certain other liabilities. The Separation and the Distribution were effected as part of a series of transactions contemplated by the Amended and Restated Merger Agreement and Plan of Merger, dated as of June 20, 2018, by and among 21CF, The Walt Disney Company (“Disney”) and certain subsidiaries of Disney, pursuant to which, among other things, 21CF became a wholly-owned subsidiary of Disney.

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

•

Overview of the Company’s Business—This section provides a general description of the Company’s businesses, as well as developments that occurred during the three ~~and six~~ months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ that the Company believes are important in understanding its results of operations and financial condition or to disclose known trends.

•

Results of Operations—This section provides an analysis of the Company’s results of operations for the three ~~and six~~ months ended ~~December 31, 2019~~September 30, 2020 and ~~2018.~~2019. This analysis is presented on both a ~~consolidated/combined~~consolidated and a segment basis. In addition, a brief description is provided of significant transactions and events that impact the comparability of the results being analyzed.

•

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

•

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

OVERVIEW OF THE COMPANY’S BUSINESS

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

•

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

•

Television, which principally consists of the acquisition, marketing and distribution of broadcast network programming nationally under the FOX brand and the operation of 2829 full power broadcast television stations, including 11 duopolies, in the U.S. Of these stations, 1718 are affiliated with the FOX Network, 10 are affiliated with MyNetworkTV and one is an independent station. The Television segment also includes Tubi, Inc. (“Tubi”), a free advertising-supported video-on-demand (“AVOD”) service.

•

Other, Corporate and Eliminations, which principally consists of ~~corporate overhead costs, intracompany eliminations,~~ the FOX ~~Studios lot and~~Studio Lot, Credible Labs Inc. (“Credible”)., corporate overhead costs and intracompany 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. Credible is a U.S. consumer finance marketplace.

Other Business Developments

~~On November 6,~~The outbreak of the coronavirus disease 2019 (“COVID-19”) pandemic has resulted in widespread and continuing negative impacts on the macroeconomic environment and disruption to the Company’s business. Weak economic conditions and increased volatility and disruption in the financial markets pose risks to the Company ~~announced that~~and its ~~Board of Directors had authorized a stock repurchase program providing for the repurchase of $2 billion~~business partners, including advertisers whose expenditures tend to reflect overall economic conditions. The COVID-19 pandemic has caused some of the Company’s ~~Common Stock. The program~~advertisers to reduce their spending, and future declines in the economic prospects of advertisers or the economy in general could negatively impact their advertising expenditures further. Depending on the duration and severity of the recession, it could lead to changes in consumer behavior, including increasing numbers of consumers canceling or foregoing subscriptions to multi-channel video programming distributor (“MVPD”) services, that adversely affect the Company’s affiliate fee and advertising revenues. In addition, the Company’s business depends on the volume and popularity of the content it distributes, particularly sports content. Following the COVID-19 outbreak, sports events to which the Company has ~~no time limit~~broadcast rights have been cancelled or postponed and the production of certain entertainment content the Company distributes has been suspended. Although some of these sports events and productions have resumed, there may be ~~modified, suspended~~additional content disruptions in the future. Depending on their duration and severity, these disruptions could materially adversely affect the Company’s future advertising revenues and, over a longer period, its future affiliate fee revenues. To the extent the pandemic further negatively impacts the Company’s ability to air sports events, particularly National Football League (“NFL”) and college sports, it could result in a significantly greater adverse effect on the Company’s business, financial condition or ~~discontinued at any time.~~results of operations than the Company has experienced thus far. In addition, shifting sports schedules may negatively impact the Company’s ability to attract viewers and advertisers to its sports and entertainment programming. The Company’s Television segment experienced a 15% decline in advertising revenue and to a lesser extent the Cable Network Programming segment in the quarter ended September 30, 2020. The Company ~~also announced~~estimates that itthe majority of these decreases are due to the ongoing impact of COVID-19, including sports events that have been cancelled or postponed and fewer hours of original scripted programming. As a result of the shifting schedules, the Company estimates that there was a corresponding decrease of approximately $280 million of sports and entertainment programming rights amortization and production costs in the quarter ended September 30, 2020. The Company believes that a majority of these costs will be recognized in fiscal 2021.

Pursuant to the merger agreement relating to the merger of Twenty-First Century Fox, Inc. (“21CF”) and The Walt Disney Company (“Disney”), the Company made a prepayment of approximately $700 million which represented the Company’s share of the estimated tax liabilities resulting from the anticipated divestitures by Disney of certain assets (the “Divestiture Tax”), principally the FOX Sports Regional Sports Networks (“RSNs”). As of September 30, 2020, Disney had ~~entered into~~sold the RSNs, the Company and Disney reached an ~~accelerated share repurchase~~ agreement to ~~repurchase $350 million~~settle the majority of ~~Class A Common Stock~~the prepaid Divestiture Tax and ~~announced its intention to promptly repurchase $150 million of Class B Common Stock. At the same time,~~ the Company ~~announced that it had entered into a stockholders agreement with~~received $462 million from Disney as reimbursement of the ~~Murdoch Family Trust (See~~Company’s prepayment based upon the sales price of the RSNs. This reimbursement was recorded in Other, net in the Statement of Operations. See Note ~~8—Stockholders’ Equity~~11—Additional Financial Information to the accompanying ~~Unaudited Consolidated and Combined~~ Financial Statements ~~of FOX under the headings “Stock Repurchase Program” and “Stockholders Agreement” for further discussion).~~

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

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

~~The United States Court of Appeals for the Third Circuit issued its decision in~~ ~~Prometheus Radio Project v. FCC~~ in the Fall of 2019, which reinstated the Federal Communications Commission’s (“FCC”) newspaper/broadcast cross-ownership rule prohibiting common ownership of broadcast stations and daily newspapers in the same designated market area (“DMA”). The FCC implemented the reinstatement on December 20, 2019. The Company owns two television stations in the New York DMA and an attributable interest in The New York Post due to the Murdoch Family Trust’s ownership interests in both the Company and News Corporation. The Company will seek a waiver of the cross-ownership rule from the FCC, but the timing and outcome of such a filing are uncertain. For more information, see “Part I. Item 1. Business - Government Regulation” in the 2019 Form 10-K.“Other, net.”

RESULTS OF OPERATIONS

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

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

	For the three months ended December 31,													For the six months ended December 31,												For the three months ended September 30,
	2019			2018			Change			% Change				2019			2018			Change			% Change			2020			2019			Change			% Change
	(in millions, except %)
(in millions, except %)																																Better/(Worse)
Revenues
Affiliate fee	$	1,436		$	1,345		$	91			7		%	$	2,830		$	2,682		$	148			6	%	$	1,533		$	1,394		$	139			10		%
Advertising		2,010			1,987			23			1		%		3,051			3,050			1			-	%		969			1,041			(72	)		(7	)	%
Other		332			251			81			32		%		564			392			172			44	%		215			232			(17	)		(7	)	%

Total revenues		3,778			3,583			195			5		%		6,445			6,124			321			5	%		2,717			2,667			50			2		%
Operating expenses		(3,091	)		(2,818	)		(273	)		10		%		(4,559	)		(4,309	)		(250	)		6	%		(1,168	)		(1,468	)		300			20		%
Selling, general and administrative		(431	)		(329	)		(102	)		31		%		(783	)		(628	)		(155	)		25	%		(388	)		(352	)		(36	)		(10	)	%
Depreciation and amortization		(57	)		(51	)		(6	)		12		%		(107	)		(94	)		(13	)		14	%		(68	)		(50	)		(18	)		(36	)	%
Impairment and restructuring charges		-			-			-		-			%		(9	)		-			(9	)	**				(35	)		(9	)		(26	)	**
Interest expense		(90	)		(15	)		(75	)	**					(180	)		(31	)		(149	)	**				(99	)		(90	)		(9	)		(10	)	%
Interest income		8			-			8		**					25			-			25		**				1			17			(16	)		(94	)	%
Other, net		302			(339	)		641		**					287			(200	)		487		**				519			(15	)		534		**

Income before income tax expense		419			31			388		**					1,119			862			257			30	%		1,479			700			779		**
Income tax expense		(105	)		(7	)		(98	)	**					(292	)		(223	)		(69	)		31	%		(362	)		(187	)		(175	)		(94	)	%

Net income		314			24			290		**					827			639			188			29	%		1,117			513			604		**
Less: Net income attributable to noncontrolling interests		(14	)		(16	)		2			(13	)	%		(28	)		(27	)		(1	)		4	%		(11	)		(14	)		3			21		%

Net income attributable to Fox Corporation stockholders	$	300		$	8		$	292		**				$	799		$	612		$	187			31	%	$	1,106		$	499		$	607		**

^**	not meaningful

Overview—The Company’s revenues increased 5%2% for the three ~~and six~~ months ended ~~December 31, 2019,~~September 30, 2020, as compared to the corresponding ~~periods~~period of fiscal ~~2019.~~2020,due to higher affiliate fee revenue, partially offset by lower advertising and other revenues. The increase in affiliate fee revenue was primarily ~~due~~attributable to higher average rates per subscriber across all networks, led by contractual rate increases from affiliate agreement renewals and ~~higher fees received from television stations that are affiliated with the FOX Network, partially offset by the impact of a lower average number of subscribers~~. on existing affiliate agreements. The ~~increase~~decrease in advertising revenue was primarily due to fewer broadcasts of NFL programming and~~to higher pricing for linear advertising~~the postponement of college football games and certain original scripted programming at the FOX Network ~~increased digital advertising revenue and two additional broadcasts~~as a result of ~~Major League Baseball (“MLB”)~~ ~~World Series~~ ~~games,~~COVID-19, partially offset by ~~lower~~higher political advertising revenue ~~at the FOX Television Stations due~~related to the ~~U.S. midterm~~2020 presidential and congressional elections ~~in November 2018~~ and ~~for~~ the ~~six months ended December 31, 2019,~~impact of the ~~effect~~consolidation of ~~fewer broadcasts of~~ ~~Fédération Internationale de Football Association (“FIFA”)~~ W~~orld Cup~~ ~~events.~~Tubi. The ~~increase~~decrease in other revenues was primarily due to lower sports sublicensing revenue related to college sports as a result of COVID-19, lower digital content licensing revenue at the FOX Network and the absence of revenues generated from Premier Boxing Champions (“PBC”) pay-per-view events at FS1, partially offset by the ~~operation~~impact of ~~the FOX Studios lot for third parties and~~ the consolidation of ~~Bento Box Entertainment, LLC (“Bento Box”) and Credible.~~Credible in fiscal 2020.

Operating expenses ~~increased 10% and 6%~~decreased 20% for the three ~~and six~~ months ended ~~December 31, 2019, respectively,~~September 30, 2020, as compared to the corresponding ~~periods~~period of fiscal ~~2019,~~ 2020, primarily due to ~~higher~~lower sports programming rights amortization and production costs, including ~~contractual rate increases for National Football League (“NFL”)~~the broadcast of fewer NFL and college football ~~content, increased~~games, and lower entertainment programming rights amortization and advertising and promotion costs due to fewer hours of original scripted programming as a result of COVID-19, partially offset by the consolidation of ~~Bento Box and Credible~~ ~~and higher broadcast costs related to operating as a standalone public company.~~ ~~Partially offsetting the increase~~Tubi in ~~operating expenses for the six months ended December 31, 2019 was the effect of fewer broadcasts of FIFA~~ ~~World Cup~~ ~~events~~.fiscal 2020.

Selling, general and administrative expenses increased ~~31% and 25%~~10% for the three ~~and six~~ months ended ~~December 31, 2019, respectively,~~September 30, 2020, as compared to the corresponding ~~periods~~period of fiscal ~~2019,~~2020, primarily due to the ~~higher costs~~ impact of acquisitions that occurred in fiscal 2020 ~~related to operating as a standalone public company~~ ~~as compared to~~ ~~allocated costs in fiscal 2019~~(the “Fiscal 2020 Acquisitions”) (See Note ~~1—Description of Business~~3—Acquisitions, Disposals and ~~Basis of Presentation~~ toOther Transactions in the ~~accompanying Unaudited Consolidated and Combined Financial Statements of FOX~~2020 Form 10-K under the heading ~~“Basis of Presentation”~~“Acquisitions and Disposals” for additional information).

Depreciation and amortization. ~~In addition,~~ —Depreciation and amortization expense increased 36% for the three ~~and six~~ months ended ~~December 31, 2019~~ ~~include~~ ~~equity-based compensation costs of approximately $15 million and $30 million, respectively, related~~September 30, 2020, as compared to the corresponding period of fiscal 2020, primarily ~~grant~~due to the Fiscal 2020 Acquisitions.

Impairment and restructuring charges—Impairment and restructuring charges increased $26 million for the three months ended September 30, 2020, as compared to the corresponding period of ~~restricted stock units and stock options, in connection with~~fiscal 2020, primarily due to higher severance costs principally at the ~~Distribution,~~ ~~under the Fox Corporation 2019 Shareholder Alignment Plan~~Cable Network Programming segment (See Note 11—~~Equity-Based Compensation in~~Additional Financial Information to the ~~2019 Form 10-K for additional information)~~accompanying Financial Statements).

Interest expense—Interest expense increased ~~$75 million and $149 million~~10% for the three ~~and six~~ months ended ~~December 31, 2019, respectively,~~September 30, 2020, as compared to the corresponding ~~periods~~period of fiscal ~~2019,~~2020, primarily due to the issuance of ~~$6.8~~$1.2 billion of senior notes in ~~January 2019~~April 2020 (See Note 9—Borrowings in the ~~2019~~2020 Form 10-K under the heading ~~“Senior~~“Public Debt – Senior Notes ~~Issued Under the January 2019 Indenture”~~Issued” for additional information).

Interest income—Interest income ~~increased $8 million and $25 million~~decreased for the three ~~and six~~ months ended ~~December 31, 2019, respectively,~~September 30, 2020, as compared to the corresponding ~~periods~~period of fiscal ~~2019,~~ 2020, primarily due to ~~a higher average cash balance.~~lower interest rates.

Other, net—See Note 1411—Additional Financial Information to the accompanying ~~Unaudited Consolidated and Combined~~ Financial Statements ~~of FOX~~ under the heading “Other, net.”

Income tax expense—The Company’s tax provision and related effective tax rate of ~~25% and 26%~~24% for the three ~~and six~~ months ended ~~December 31, 2019, respectively, were~~September 30, 2020 was higher than the statutory rate of 21% primarily due to state taxes, ~~and other permanent items.~~partially offset by a benefit from the reduction of uncertain tax positions for state tax audits.

The Company’s tax provision and related effective tax rate of ~~23% and 26%~~27% for the three ~~and six~~ months ended ~~December 31, 2018, respectively, were~~September 30, 2019 was higher than the statutory rate of 21% primarily due to state taxes and other permanent items.

Net income—Net income increased ~~$290 million and $188~~$604 million for the three ~~and six~~ months ended ~~December 31, 2019, respectively,~~September 30, 2020, as compared to the corresponding ~~periods~~period of fiscal ~~2019,~~2020, primarily due to ~~unrealized gains~~ the receipt of the $462 million reimbursement from Disney related to ~~changes in fair value of~~ the ~~Company’s investments in equity securities in fiscal 2020 as compared to unrealized losses in fiscal 2019~~Divestiture Tax (See Note ~~14—Additional Financial Information~~1—Description of Business and Basis of Presentation to the accompanying ~~Unaudited Consolidated and Combined~~ Financial Statements ~~of FOX under the heading “Other, net”)~~for additional information) and higher ~~revenues,~~Segment EBITDA (as defined below) at the Television and Cable Network Programming segments, partially offset by ~~increased operating expenses at the Television segment as well as~~ higher ~~selling, general and administrative and~~ ~~interest expense~~s.Income tax expense.

Segment Analysis

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

	For the three months ended December 31,									For the six months ended December 31,										For the three months ended September 30,
	2019		2018		Change		% Change			2019		2018			Change		% Change			2020		2019		Change			% Change
	(in millions, except %)
(in millions, except %)																								Better/(Worse)
Revenues
Cable Network Programming	$	1,469	$	1,434	$	35		2	%	$	2,754	$	2,699		$	55		2	%	$	1,325	$	1,285	$	40			3	%
Television		2,266		2,149		117		5	%		3,622		3,426			196		6	%		1,350		1,356		(6	)		-	%
Other, Corporate and Eliminations		43		-		43	**				69		(1	)		70	**				42		26		16			62	%

Total revenues	$	3,778	$	3,583	$	195		5	%	$	6,445	$	6,124		$	321		5	%	$	2,717	$	2,667	$	50			2	%

^**	~~not meaningful~~

	For the three months ended September 30,
	2020			2019			Change		% Change
(in millions, except %)							Better/(Worse)
Segment EBITDA
Cable Network Programming	$	781		$	684		$	97		14	%
Television		457			251			206		82	%
Other, Corporate and Eliminations		(72	)		(79	)		7		9	%
Adjusted EBITDA^(a)	$	1,166		$	856		$	310		36	%

For the three months ended December 31,

For the six months ended December 31,

2019

2018

Change

% Change

2019

2018

Change

% Change

(in millions, except %)
Segment EBITDA

Cable Network Programming

$
556

$
519

$
37

7

%

$
1,240

$
1,152

$
88

8

%

Television

(214
)

(14
)

(200
)

**

37

157

(120
)

(76
)
%

Other, Corporate and Eliminations

(81
)

(60
)

(21
)

35

%

(160
)

(103
)

(57
)

55

%

Adjusted EBITDA^(a)

$
261

$
445

$
(184
)

(41
)
%

$
1,117

$
1,206

$
(89
)

(7
)
%

^**	~~not meaningful~~

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

Cable Network Programming ~~(43~~(49% and ~~44%~~48% of the Company’s revenues for the first ~~six~~three months of fiscal ~~2020~~2021 and ~~2019,~~2020, respectively)

	For the three months ended December 31,													For the six months ended December 31,													For the three months ended September 30,
	2019			2018			Change			% Change				2019			2018			Change			% Change				2020			2019			Change			% Change
	(in millions, except %)
(in millions, except %)																																	Better/(Worse)
Revenues
Affiliate fee	$	957		$	938		$	19			2		%	$	1,896		$	1,877		$	19			1		%	$	973		$	939		$	34			4		%
Advertising		337			353			(16	)		(5	)	%		591			617			(26	)		(4	)	%		299			254			45			18		%
Other		175			143			32			22		%		267			205			62			30		%		53			92			(39	)		(42	)	%

Total revenues		1,469			1,434			35			2		%		2,754			2,699			55			2		%		1,325			1,285			40			3		%
Operating expenses		(792	)		(808	)		16			(2	)	%		(1,312	)		(1,349	)		37			(3	)	%		(434	)		(520	)		86			17		%
Selling, general and administrative		(126	)		(116	)		(10	)		9		%		(216	)		(217	)		1			-		%		(115	)		(90	)		(25	)		(28	)	%
Amortization of cable distribution investments		5			9			(4	)		(44	)	%		14			19			(5	)		(26	)	%		5			9			(4	)		(44	)	%

Segment EBITDA	$	556		$	519		$	37			7		%	$	1,240		$	1,152		$	88			8		%	$	781		$	684		$	97			14		%

Revenues at the Cable Network Programming segment increased 2%3% for the three ~~and six~~ months ended ~~December 31, 2019,~~September 30, 2020, as compared to the corresponding ~~periods~~period of fiscal ~~2019.~~2020, due to higher affiliate fee and advertising revenues, partially offset by lower other revenues. The increase in affiliate fee revenue was primarily attributable to higher average rates per subscriber, led by contractual rate increases on existing affiliate agreements and from affiliate agreement renewals, partially offset by the impact of a lower average number of subscribers. The decrease in the average number of subscribers was due to a reduction in subscribers to traditional MVPDs, partially offset by an increase in digital MVPD subscribers. The ~~decrease~~increase in advertising revenue was primarily due to ~~lower~~the 2020 presidential election which drove higher linear advertising revenue, including ~~the effect of~~ higher ~~preemptions associated with breaking news coverage, the absence of Ultimate Fighting Championship (“UFC”) content~~pricing and ~~lower college football ratings. Partially offsetting the decrease in advertising revenue were higher~~ratings, and digital advertising revenue ~~and increased pricing and a higher number of MLB postseason commercial units. Also contributing to~~at FOX News Media, partially offset by the ~~decrease in advertising revenue for the six months ended December 31, 2019 was the effect~~broadcast of fewer ~~broadcasts~~live sports events, including college football, as a result of ~~FIFA~~ ~~World Cup~~ ~~events.~~COVID-19. The ~~increase~~decrease in other revenues was primarily attributable to

~~higher~~ lower sports sublicensing revenue and the absence of revenues generated from ~~Premier Boxing Champions (“PBC”)~~PBC pay-per-view ~~events.~~events principally as a result of COVID-19, partially offset by higher revenues at FOX News Media.

Cable Network Programming Segment EBITDA increased ~~7% and 8%~~14% for the three ~~and six~~ months ended ~~December 31, 2019, respectively,~~September 30, 2020, as compared to the corresponding ~~periods~~period of fiscal ~~2019, primarily~~2020, due to the revenue increases noted above and lower expenses. Operating expenses decreased for the three ~~and six~~ months ended ~~December 31, 2019~~September 30, 2020 primarily due to lower sports programming rights amortization and production costs driven by the postponement of live sports events, partially offset by the shift of National Association of Stock Car Auto Racing (“NASCAR”) Cup Series races and Major League Baseball

(“MLB”) regular season games into the first quarter of fiscal 2021 as a result of COVID-19. Selling, general and administrative expenses increased for the three months ended September 30, 2020 principally due to higher ~~costs~~legal and marketing expenses at FOX News Media, including talent costs and costs incurred in connection with FOX Nation. Sports programming rights amortization decreased primarily due to the absence of UFC content, partially offset by contractual rate increases for college football and PBC content. Also contributing to the decrease in operating expenses for the six months ended December 31, 2019 was the effect of fewer broadcasts of FIFA ~~World Cup~~Media. ~~events.~~

Television ~~(56~~(50% and 51% of the Company’s revenues for the first ~~six~~three months of fiscal ~~2020~~2021 and ~~2019)~~2020, respectively)

For the three months ended December 31,

For the six months ended December 31,

2019

2018

Change

% Change

2019

2018

Change

% Change

(in millions, except %)
Revenues

Advertising

$
1,673

$
1,634

$
39

2

%

$
2,460

$
2,433

$
27

1

%

Affiliate fee

479

407

72

18

%

934

805

129

16

%

Other

114

108

6

6

%

228

188

40

21

%

Total revenues

2,266

2,149

117

5

%

3,622

3,426

196

6

%

Operating expenses

(2,284
)

(2,010
)

(274
)

14

%

(3,227
)

(2,961
)

(266
)

9

%

Selling, general and administrative

(196
)

(153
)

(43
)

28

%

(358
)

(308
)

(50
)

16

%

Segment EBITDA

$
(214
)

$
(14
)

$
(200
)

**

$
37

$
157

$
(120
)

(76
)
%

^**	~~not meaningful~~

	For the three months ended September 30,
	2020			2019			Change			% Change
(in millions, except %)							Better/(Worse)
Revenues
Advertising	$	670		$	787		$	(117	)		(15	)	%
Affiliate fee		560			455			105			23		%
Other		120			114			6			5		%
Total revenues		1,350			1,356			(6	)		-		%
Operating expenses		(714	)		(943	)		229			24		%
Selling, general and administrative		(179	)		(162	)		(17	)		(10	)	%
Segment EBITDA	$	457		$	251		$	206			82		%

Revenues at the Television segment ~~increased 5% and 6%~~ for the three ~~and six~~ months ended ~~December 31, 2019, respectively,~~September 30, 2020 remained consistent, as compared to the corresponding ~~periods~~period of fiscal ~~2019.~~2020, as higher affiliate fee and other revenues were offset by lower advertising revenue. The ~~increase~~decrease in advertising revenue was primarily due to ~~higher pricing for linear advertising~~fewer broadcasts of NFL programming, the postponement of college football games and certain original scripted programming at the FOX Network ~~two additional broadcasts~~as a result of ~~MLB~~COVID-19 and the absence of the prior year broadcast of the ~~World Series~~71st Annual Primetime Emmy Awards ~~games, a higher number of broadcasts of college football regular season games on the FOX Network and increased digital advertising revenue.~~. Partially offsetting the ~~increase~~decrease in advertising revenue ~~were lower~~was higher political advertising revenue related to the 2020 presidential and congressional elections at the FOX Television Stations ~~due to~~and the ~~U.S. midterm elections in November 2018 and, for~~impact of the ~~six months ended December 31, 2019, fewer broadcasts~~consolidation of ~~FIFA~~ ~~World Cup~~ ~~events.~~Tubi. The increase in affiliate fee revenue was primarily due to higher fees received from television stations that are affiliated with the FOX Network and higher average rates per subscriber, ~~at the Company’s owned and operated television stations,~~ partially offset by a lower average number of subscribers, at the Company’s owned and operated television stations. ~~The increase in other revenues was primarily due to the consolidation of Bento Box. Partially offsetting the increase in other revenues~~

Television Segment EBITDA increased 82% for the three months ended ~~December 31, 2019 was lower digital content licensing revenue at the FOX Network.~~

~~Television Segment EBITDA decreased for the three and six months ended December 31, 2019, respectively,~~September 30, 2020, as compared to the corresponding ~~periods~~period of fiscal ~~2019, as the revenue increases noted above were more than offset by higher~~2020, primarily due to lower expenses. Operating expenses ~~increased~~decreased primarily due to ~~higher~~lower sports programming rights amortization and production costs,, including ~~contractual rate increases for~~the broadcast of fewer NFL and college football ~~content~~games, and ~~the addition of~~ ~~WWE Friday Night SmackDown, and higher~~lower entertainment programming rights amortization ~~including investments in~~and advertising and marketing costs due to fewer hours of original scripted programming ~~and co-production arrangements with third party studios, and~~as a result of COVID-19, partially offset by the impact of the consolidation of ~~Bento Box. Partially offsetting the increase in operating expenses for the six months ended December 31, 2019 was the effect of fewer broadcasts of FIFA~~ ~~World Cup~~ ~~events. Selling, general and administrative expenses increased primarily due to higher costs related to operating as a standalone public company.~~Tubi.

Other, Corporate and Eliminations (1(%1% of the Company’s revenues for the first ~~six~~three months of fiscal 2021 and 2020)

	For the three months ended December 31,												For the six months ended December 31,												For the three months ended September 30,
	2019			2018			Change			% Change			2019			2018			Change			% Change			2020			2019			Change			% Change
	(in millions, except %)
(in millions, except %)																															Better/(Worse)
Revenues	$	43		$	-		$	43		**			$	69		$	(1	)	$	70		**			$	42		$	26		$	16			62	%
Operating expenses		(15	)		-			(15	)	**				(20	)		1			(21	)	**				(20	)		(5	)		(15	)	**
Selling, general and administrative		(109	)		(60	)		(49	)		82	%		(209	)		(103	)		(106	)	**				(94	)		(100	)		6			6	%

Segment EBITDA	$	(81	)	$	(60	)	$	(21	)		35	%	$	(160	)	$	(103	)	$	(57	)		55	%	$	(72	)	$	(79	)	$	7			9	%

^**	not meaningful

Revenues at the Other, Corporate and Eliminations segment increased 62% for the three ~~and six~~ months ended ~~December 31, 2019 include revenues generated from~~September 30, 2020, as compared to the ~~operation~~corresponding period of fiscal 2020, primarily due to the ~~FOX Studios lot for third parties and~~impact of the consolidation of Credible. Operating expenses ~~for~~increased principally due to the ~~three and six months ended December 31, 2019 include the costs~~impact of ~~operating the FOX Studios lot for third parties and~~ the consolidation of Credible. Selling, general and administrative expenses ~~increased~~decreased primarily due to ~~higher~~lower employee costs ~~related to operating as a standalone public company,~~and professional fees, partially offset by the ~~costs~~impact of ~~operating the FOX Studioslot for third parties and~~ the consolidation of Credible.

Non-GAAP Financial Measures

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

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

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

The following table reconciles Net income to Adjusted EBITDA for the three ~~and six~~ months ended ~~December 31, 2019,~~September 30, 2020, as compared to the three ~~and six~~ months ended ~~December 31, 2018:~~September 30, 2019:

	For the three months ended December 31,												For the six months ended December 31,												For the three months ended September 30,
	2019			2018		Change			% Change				2019			2018		Change			% Change				2020			2019
	(in millions, except %)																								(in millions)
Net income	$	314		$	24	$	290		**				$	827		$	639	$	188			29		%	$	1,117		$	513
Add
Amortization of cable distribution investments		5			9		(4	)		(44	)	%		14			19		(5	)		(26	)	%		5			9
Depreciation and amortization		57			51		6			12		%		107			94		13			14		%		68			50
Impairment and restructuring charges		-			-		-			-		%		9			-		9		**					35			9
Interest expense		90			15		75		**					180			31		149		**					99			90
Interest income		(8	)		-		(8	)	**					(25	)		-		(25	)	**					(1	)		(17	)
Other, net		(302	)		339		(641	)	**					(287	)		200		(487	)	**					(519	)		15
Income tax expense		105			7		98		**					292			223		69			31		%		362			187

Adjusted EBITDA	$	261		$	445	$	(184	)		(41	)	%	$	1,117		$	1,206	$	(89	)		(7	)	%	$	1,166		$	856

^**	~~not meaningful~~

The following table sets forth the computation of Adjusted EBITDA for the three ~~and six~~ months ended ~~December 31, 2019,~~September 30, 2020, as compared to the three ~~and six~~ months ended ~~December 31, 2018:~~September 30, 2019:

	For the three months ended December 31,													For the six months ended December 31,													For the three months ended September 30,
	2019			2018			Change			% Change				2019			2018			Change			% Change				2020			2019
	(in millions, except %)																										(in millions)
Revenues	$	3,778		$	3,583		$	195			5		%	$	6,445		$	6,124		$	321			5		%	$	2,717		$	2,667
Operating expenses		(3,091	)		(2,818	)		(273	)		10		%		(4,559	)		(4,309	)		(250	)		6		%		(1,168	)		(1,468	)
Selling, general and administrative		(431	)		(329	)		(102	)		31		%		(783	)		(628	)		(155	)		25		%		(388	)		(352	)
Amortization of cable distribution investments		5			9			(4	)		(44	)	%		14			19			(5	)		(26	)	%		5			9

Adjusted EBITDA	$	261		$	445		$	(184	)		(41	)	%	$	1,117		$	1,206		$	(89	)		(7	)	%	$	1,166		$	856

LIQUIDITY AND CAPITAL RESOURCES

Current Financial Condition

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.~~markets, the latter of which is being negatively impacted by the weak economic environment as a result of COVID-19. Depending on the duration and severity of the recession, it could lead to changes in consumer behavior, including increasing numbers of consumers canceling or foregoing subscriptions to MVPD services, that adversely affect the Company’s affiliate fee and advertising revenues. In addition, the Company’s business depends on the volume and popularity of the content it distributes, particularly sports content. Following the COVID-19 outbreak, sports events to which the Company has broadcast rights were cancelled or postponed and the production of certain entertainment content the Company distributes was suspended. If the Company experiences a recurrence of these disruptions, depending on their duration and severity, they could materially adversely affect the Company’s future advertising revenues and, over a longer period of time, its future affiliate fee revenues. The magnitude of the impact of the COVID-19 pandemic on the Company is highly uncertain and subject to change and will depend on evolving factors beyond the Company’s control. These include the duration and extent of the pandemic, increases or spikes in the number of cases, or future mutations or related strains of the virus; the duration and extent of the recession, the pace of economic recovery and the economic and operating conditions facing the Company and others in the pandemic’s aftermath; the effect of governmental actions; and potential changes in consumer behavior. As part of actions the Company is taking to address COVID-19 and the resulting impact on its business, operations and employees, in April 2020, the Company implemented short-term cost reductions, including reducing executive compensation and suspending compensation increases. The Company has approximately $5.1 billion of cash and cash equivalents as of September 30, 2020 and an unused five-year $1.0 billion unsecured revolving credit facility (See Note 6—5—Borrowings to the accompanying ~~Unaudited Consolidated and Combined~~ Financial ~~Statements of FOX) and~~Statements). The Company also has access to the worldwide capital markets, subject to market ~~conditions.~~conditions which could be impacted by COVID-19. As of ~~December 31, 2019,~~ September 30, 2020, 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.

The principal uses of cash that affect the Company’s liquidity position include the following: the acquisition of rights and related payments for entertainment and sports programming; operational expenditures including production costs; marketing and promotional expenses; expenses related to broadcasting the Company’s programming along with ~~investing approximately $150 million to $200 million~~the continued investment in establishing the Company’s standalone broadcast technical facilities ~~over the two years~~ following the ~~Distribution;~~Distribution (as defined in Note 1—Description of Business and Basis of Presentation in the 2020 Form 10-K under the heading “The Distribution”); employee and facility costs; capital expenditures; acquisitions; interest and dividend payments; debt repayments; and stock repurchases.

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

Sources and Uses of Cash

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

For the six months ended December 31,

2019

2018

Net cash (used in) provided by operating activities

$
(256
)

$
36

For the three months ended September 30,		2020				2019
Net cash provided by operating activities		$	267			$	202

The ~~change~~increase in net cash ~~(used in)~~ provided by operating activities during the ~~six~~three months ended ~~December 31, 2019,~~September 30, 2020, as compared to the corresponding period of fiscal ~~2019,~~2020, was primarily due to higher ~~seasonal cash payments~~Segment EBITDA, partially offset by contractual increases for sports programming rights, athigher inventory balances due to the ~~Television segment~~postponement of certain sports events and ~~increased cash paid for interest as a result of the senior notes issued in January 2019.~~higher tax payments.

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

For the six months ended December 31,	2019			2018
For the three months ended September 30,							2020			2019
Net cash used in investing activities	$	(349	)	$	(251	)	$	(149	)	$	(40	)

The increase in net cash used in investing activities during the ~~six~~three months ended ~~December 31, 2019,~~September 30, 2020, as compared to the corresponding period of fiscal ~~2019,~~2020, was primarily due to ~~the Credible Acquisition in October 2019 as compared~~payments related to ~~the~~ investments in ~~Caffeine, Inc. and Caffeine Studio, LLC in~~establishing the ~~first quarter of fiscal 2019 (See Note 2—Acquisitions, Disposals and Other Transactions to the accompanying Unaudited Consolidated and Combined Financial Statements of FOX).~~Company’s standalone broadcast technical facilities.

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

For the six months ended December 31,

2019

2018

Net cash used in financing activities

$
(638
)

$
(334
)

For the three months ended September 30,		2020				2019
Net cash provided by (used in) financing activities		$	298			$	(56	)

The ~~increase~~change in net cash ~~used in~~provided by (used in) financing activities during the ~~six~~three months ended ~~December 31, 2019,~~September 30, 2020, as compared to the corresponding period of fiscal ~~2019,~~2020, was primarily due to ~~repurchases of shares~~the receipt of the ~~Company’s Common Stock and dividends paid~~$462 million reimbursement from Disney related to the ~~Company’s stockholders~~ ~~during~~Divesture Tax, partially offset by activity under the ~~six months ended December 31, 2019 as compared to~~ ~~the net transfers to Twenty-First Century Fox, Inc. of $312~~ ~~million in the six months ended December 31, 2018.~~ ~~The nature of activities included in net transfers to Twenty-First Century Fox, Inc. includes financing activities, capital transfers, cash sweeps, other treasury services and corporate expenses.~~stock repurchase program.

Stock Repurchase Program

See Note 8—6—Stockholders’ Equity to the accompanying ~~Unaudited Consolidated and Combined~~ Financial Statements ~~of FOX~~ under the heading “Stock Repurchase Program.”

Dividends

Debt Instruments

Borrowings include senior notes (See Note 9—Borrowings into the ~~2019~~2020 Form 10-K under the heading ~~“Senior~~“Public Debt – Senior Notes ~~Issued Under the January 2019 Indenture”~~Issued”).

Ratings of the senior notes

The following table summarizes the Company’s credit ratings as of ~~December 31, 2019:~~September 30, 2020:

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

Revolving Credit Agreement

The Company has an unused five-year $1.0 billion unsecured revolving credit facility with a maturity date of March 2024 (See Note 6—5—Borrowings to the accompanying ~~Unaudited Consolidated and Combined~~ Financial ~~Statements of FOX)~~Statements).

Commitments and Contingencies

See Note ~~11—~~8—Commitments and Contingencies to the accompanying ~~Unaudited Consolidated and Combined~~ Financial ~~Statements of FOX.~~Statements.

Recent Accounting Pronouncements

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

Caution Concerning Forward-Looking Statements

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

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

•

~~recent~~the impact of COVID-19 and ~~future changes in technology, including alternative methods for the delivery~~other widespread health emergencies or pandemics and ~~storage of digital content,~~measures to contain their spread and ~~in consumer behavior, including changes in when, where~~related weak macroeconomic conditions and ~~how they consume content;~~increased market volatility;

•

~~changes~~the impact of COVID-19 specifically on the Company, including content disruptions that negatively affect the volume or popularity of the Company’s programming, particularly sports programming, and potential non-cash impairment charges resulting from significant declines in the Company’s ~~strategies and initiatives and~~estimated revenues or the ~~acceptance thereof by consumers, distributors~~expected popularity of the Company’s programming;

•

evolving technologies and distribution platforms and changes in consumer behavior as consumers seek more control over when, where and how they consume content, ~~affiliates,~~and related impacts on advertisers and ~~other parties with~~traditional MVPDs;

•

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

•

the failure to enter into or renew on favorable terms, or at all, affiliation or carriage agreements or arrangements through which the Company ~~does business;~~makes its content available for viewing through online video platforms;

•

further declines in the number of subscribers to traditional MVPD services;

•

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

•

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

•

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

•

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

•

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

•

damage to the Company’s brands or reputation;

•

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

•

the failure to comply with laws, regulations, rules, industry standards or contractual obligations relating to privacy and personal data protection;

•

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

•

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

•

the loss of key personnel;

•

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

•

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

•

the impact of any investigations or fines from governmental authorities, including ~~FCC~~Federal Communications Commission (“FCC”) rules and policies and FCC decisions regarding revocation, renewal or grant of station licenses, waivers and other matters;

•

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

•

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

•

changes in GAAP or other applicable accounting standards and policies;

•

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

•

increased costs in 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 during a transition ~~period~~periods under ~~the~~ transition services ~~agreement~~agreements with 21CF, including broadcast operations, sports production, information systems and technology, and other services, and the risks that 21CF does not properly provide the services under ~~this agreement~~these agreements or that the Company is unable to provide or obtain such services following the applicable transition period (or during ~~the~~such transition period, if 21CF does not properly provide them in a timely and cost effective manner);

•

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

•

the impact of any payments the Company is required to make or liabilities it is required to assume under the Separation Agreement (as defined in Note 1—Description of Business and Basis of Presentation in the 2020 Form 10-K) and the indemnification arrangements entered into in connection with the Separation and the ~~Distribution;~~Distribution (as defined in Note 1—Description of Business and Basis of Presentation in the 2020 Form 10-K); and

•

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

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

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the market risks reported in the ~~2019~~2020 Form 10-K.

ITEM 4.

CONTROLS AND PROCEDURES

(a)

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and were effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b)

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company’s ~~second~~first quarter of fiscal ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.Due to the COVID-19 pandemic, most of the Company’s employees continue to work remotely, and the Company has strived to minimize the impact of this on the design and effectiveness of the Company’s internal control over financial reporting. The Company is continually monitoring and assessing its internal control over financial reporting and has not experienced any material impact to its internal control over financial reporting due to the COVID-19 pandemic.

PART II

ITEM 1.

LEGAL PROCEEDINGS

There have been no material changes to the Company’s legal proceedings described in the section titled “Legal Proceedings” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020 as filed with the Securities and Exchange Commission on August 10, 2020 (the “2020 Form 10-K”).

ITEM 1A.

RISK FACTORS

There have been no material changes to the risk factors described in the section titled “Risk Factors” in the ~~Company’s Annual Report on~~2020 Form 10-K (File No. 001-38776), as filed with the Securities and Exchange Commission on August 9, 2019, and the Company’s Quarterly Report on Form 10-Q (File No. 001-38776), as filed with the Securities and Exchange Commission on November 6, 2019.10-K.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Below is a summary of the Company’s repurchases of its Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”), and Class B Common Stock, par value $0.01 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”), during the three months ended ~~December 31, 2019:~~September 30, 2020:

	Total number of shares purchased^(a)		Average price paid per share^(b)		Approximate dollar value of shares that may yet be purchased under the program^(b)(c)		Total number of shares purchased^(a)		Average price paid per share^(b)		Approximate dollar value of shares that may yet be purchased under the program^(b)(c)
					(in millions)						(in millions)
October 1, 2019 – October 31, 2019
July 1, 2020 – July 31, 2020
Class A common stock		-	$	-				-	$	-
Class B common stock		-		-				-		-
November 1, 2019 – November 30, 2019
August 1, 2020 – August 31, 2020
Class A common stock^(d)		8,002,286		-				5,821,538		27.23
Class B common stock(d)		269,097		34.97				2,322,772		27.44
December 1, 2019 – December 31, 2019
Class A common stock		-		-
Class B common stock		1,891,358		35.73

September 1, 2020 – September 30, 2020
Class A common stock^(d)								1,223,992		27.40
Class B common stock^(d)								516,197		27.49
Total
Class A common stock^(d)		8,002,286		-				7,045,530		27.26
Class B common stock		2,160,455	35.64
Class B common stock^(d)								2,838,969		27.45
		10,162,741			$	1,573		9,884,499			$	1,130

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

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

^(c)(^c⁾

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

^(d)(^d)

In connection with the stock repurchase program, the Company entered into antwo accelerated share repurchase (“ASR”) ~~agreement~~agreements to repurchase ~~$350~~$154 million of Class A Common Stock and $66 million of Class B Common Stock in ~~November 2019.~~August 2020. In accordance with the ASR ~~agreement,~~agreements, in ~~November 2019,~~August 2020, the Company paid a third-party financial institution ~~$350~~$154 million and $66 million and received an initial ~~delivery~~deliveries of approximately ~~eight~~4.7 million and 2.0 million shares of Class A Common Stock and Class B Common Stock, respectively, representing 80% of the shares expected to be repurchased under ~~the~~each ASR agreement, at a price of ~~$34.99~~$26.00 and $26.01 per ~~share.~~share, respectively. Upon settlement of the ASR ~~agreement~~agreements in ~~January~~September 2020, the Company received a final ~~delivery~~deliveries of approximately ~~two~~0.9 million and 0.4 million shares of Class A Common ~~Stock.~~Stock and Class B Common Stock, respectively. The final number of shares purchased under the ASR ~~agreement~~agreements was determined using a price of ~~$36.05~~$27.57 and $27.67 per share (the volume-weighted average market price of the Class A Common Stock and Class B Common Stock, respectively, during the ~~term~~terms of the ASR ~~agreement~~agreements less a ~~discount)~~discount applicable for the Class A Common Stock) (See Note 8—6—Stockholders’ Equity to the accompanying Unaudited Consolidated ~~and Combined~~ Financial Statements of FOX under the heading “Stock Repurchase Program” for more information).

In total, the Company repurchased approximately 10 million shares of Common Stock for $270 million during the three months ended September 30, 2020.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable

ITEM 5.

OTHER INFORMATION

Not applicable

ITEM 6.

EXHIBITS

(a)

Exhibits.

~~3.1~~		Certificate of Elimination of Series A Junior Participating Preferred Stock of Fox Corporation (the “Registrant”) (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K dated November 20, 2019 and filed with the Securities and Exchange Commission (the “SEC”) on November 20, 2019).

~~10.1~~		Stockholders Agreement, dated as of November 6, 2019, by and between the Registrant and the Murdoch Family Trust (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated November 5, 2019 and filed with the SEC on November 6, 2019).

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

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

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

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

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

*	Filed herewith.

**	Furnished herewith.

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Fox Corporation
	(Registrant)

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

Date: ~~February 5,~~November 3, 2020

3933

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

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

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

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

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

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

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

Present value of operating lease liabilities	$	571