UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒
x			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ~~for~~
			For the quarterly period ended September 30, ~~2020~~ 2021

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

Commission file number 001-38776

FOX CORPORATION

(Exact Name of Registrant as Specified in its Charter)

~~Delaware~~		~~83-1825597~~


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~~

New York,

New York

10036

(Address of Principal Executive ~~Offices)~~

(Offices and 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 ☒x No ☐o

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 ☒x No ☐o

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

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. ☐o

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

As of ~~October 30, 2020, 337,543,344~~November 1, 2021, 320,346,625 shares of Class A Common Stock, par value $0.01 per share, and ~~257,829,747~~249,239,510 shares of Class B Common Stock, par value $0.01 per share, were outstanding.

FOX CORPORATION

FORM 10-Q

TABLE OF CONTENTS

~~Page~~

Page

Part I. Financial Information

Item 1.

Financial Statements

Unaudited Consolidated Statements of Operations for the three months ended September ~~30, 2020~~ 3 0 , 2021 and ~~2019~~2020

Unaudited Consolidated Statements of Comprehensive Income for the three months ended September ~~30, 2020~~ 3 0 , 2021 and ~~2019~~2020

Consolidated Balance Sheets as of September ~~30, 2020~~ 3 0 , 2021 (unaudited) and June 30, ~~2020~~202 1 (audited)

Unaudited Consolidated Statements of Cash Flows for the three months ended September ~~30, 2020~~ 3 0 , 2021 and ~~2019~~2020

Unaudited Consolidated Statements of Equity for the ~~three~~thre e months ended September ~~30, 2020~~ 3 0 , 2021 and ~~2019~~2020

Notes to the Unaudited Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Part II. Other Information

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

~~Exhibits~~29

FOX CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)


	For the three months ended September 30,							For the three months ended September 30,
	2020			2019				2021		2020
Revenues	$	2,717		$	2,667		Revenues	$	3,045	$	2,717
Operating expenses		(1,168	)		(1,468	)	Operating expenses	(1,571)		(1,168)
Selling, general and administrative		(388	)		(352	)	Selling, general and administrative	(415)		(388)
Depreciation and amortization		(68	)		(50	)	Depreciation and amortization	(79)		(68)
Impairment and restructuring charges		(35	)		(9	)	Impairment and restructuring charges	—		(35)
Interest expense		(99	)		(90	)
Interest income		1			17
Interest expense, net							Interest expense, net	(97)		(98)
Other, net		519			(15	)	Other, net	69		519
Income before income tax expense		1,479			700		Income before income tax expense	952		1,479
Income tax expense		(362	)		(187	)	Income tax expense	(244)		(362)
Net income		1,117			513		Net income	708		1,117
Less: Net income attributable to noncontrolling interests		(11	)		(14	)	Less: Net income attributable to noncontrolling interests	(7)		(11)
Net income attributable to Fox Corporation stockholders	$	1,106		$	499		Net income attributable to Fox Corporation stockholders	$	701	$	1,106

EARNINGS PER SHARE DATA							EARNINGS PER SHARE DATA

Weighted average shares
Weighted average shares:							Weighted average shares:
Basic		603			622		Basic	575		603
Diluted		605			624		Diluted	578		605

Net income attributable to Fox Corporation stockholders per share - basic and diluted	$	1.83		$	0.80
Net income attributable to Fox Corporation stockholders per share:							Net income attributable to Fox Corporation stockholders per share:
Basic							Basic	$	1.22	$	1.83
Diluted							Diluted	$	1.21	$	1.83

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

FOX CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN MILLIONS)


	For the three months ended September 30,							For the three months ended September 30,
	2020			2019				2021		2020
Net income	$	1,117		$	513		Net income	$	708	$	1,117
Other comprehensive income, net of tax
Other comprehensive income, net of tax:							Other comprehensive income, net of tax:
Benefit plan adjustments		9			4		Benefit plan adjustments	6		9
Other comprehensive income, net of tax		9			4		Other comprehensive income, net of tax	6		9
Comprehensive income		1,126			517		Comprehensive income	714		1,126
Less: Net income attributable to noncontrolling interests^(a)		(11	)		(14	)	Less: Net income attributable to noncontrolling interests(a)	(7)		(11)
Comprehensive income attributable to Fox Corporation stockholders	$	1,115		$	503		Comprehensive income attributable to Fox Corporation stockholders	$	707	$	1,115

___________

^(a)
(a)			Net income attributable to noncontrolling interests includes $4$(1) million and $9$4 million for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, relating to redeemable noncontrolling interests.

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

FOX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)


	As of September 30, 2020			As of June 30, 2020				As of September 30, 2021		As of June 30, 2021
	(unaudited)			(audited)				(unaudited)		(audited)
ASSETS							ASSETS
Current assets							Current assets
Cash and cash equivalents	$	5,061		$	4,645		Cash and cash equivalents	$	5,411	$	5,886
Receivables, net		1,997			1,888		Receivables, net	2,192		2,029
Inventories, net		1,271			856		Inventories, net	1,135		729
Other		134			97		Other	137		105
Total current assets		8,463			7,486		Total current assets	8,875		8,749
Non-current assets							Non-current assets
Property, plant and equipment, net		1,539			1,498		Property, plant and equipment, net	1,656		1,708
Intangible assets, net		3,183			3,198		Intangible assets, net	3,155		3,154
Goodwill		3,409			3,409		Goodwill	3,532		3,435
Deferred tax assets		3,963			4,358		Deferred tax assets	3,653		3,822
Other non-current assets		1,940			1,801		Other non-current assets	2,290		2,058
Total assets	$	22,497		$	21,750		Total assets	$	23,161	$	22,926
LIABILITIES AND EQUITY							LIABILITIES AND EQUITY
Current liabilities							Current liabilities
Borrowings							Borrowings	$	750	$	749
Accounts payable, accrued expenses and other current liabilities	$	2,012		$	1,906		Accounts payable, accrued expenses and other current liabilities	2,119		2,253
Total current liabilities							Total current liabilities	2,869		3,002
Non-current liabilities							Non-current liabilities
Borrowings		7,947			7,946		Borrowings	7,203		7,202
Other liabilities		1,422			1,482		Other liabilities	1,357		1,336
Redeemable noncontrolling interests		310			305		Redeemable noncontrolling interests	302		261
Commitments and contingencies							Commitments and contingencies	0		0
Equity							Equity
Class A common stock^(a)		3			3		Class A common stock(a)	3		3
Class B common stock^(b)		3			3		Class B common stock(b)	3		3
Additional paid-in capital		9,668			9,831		Additional paid-in capital	9,327		9,453
Retained earnings		1,525			674		Retained earnings	2,409		1,982
Accumulated other comprehensive loss		(408	)		(417	)	Accumulated other comprehensive loss	(312)		(318)
Total Fox Corporation stockholders' equity		10,791			10,094		Total Fox Corporation stockholders' equity	11,430		11,123
Noncontrolling interests		15			17		Noncontrolling interests	—		2
Total equity		10,806			10,111		Total equity	11,430		11,125
Total liabilities and equity	$	22,497		$	21,750		Total liabilities and equity	$	23,161	$	22,926

___________

^(a)
(a)			Class A common stock, $0.01 par value per share, 2,000,000,000 shares authorized, ~~338,409,167~~320,894,401 shares and ~~343,608,673~~324,361,864 shares issued and outstanding at par as of September 30, ~~2020~~2021 and June 30, ~~2020,~~2021, respectively.

^(b)
(b)			Class B common stock, $0.01 par value per share, 1,000,000,000 shares authorized, ~~258,239,386~~249,625,849 shares and ~~261,078,355~~251,821,556 shares issued and outstanding at par as of September 30, ~~2020~~2021 and June 30, ~~2020,~~2021, respectively.

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

FOX CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS)


	For the three months ended September 30,							For the three months ended September 30,
	2020			2019				2021		2020
OPERATING ACTIVITIES							OPERATING ACTIVITIES
Net income	$	1,117		$	513		Net income	$	708	$	1,117
Adjustments to reconcile net income to cash provided by operating activities							Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization		68			50		Depreciation and amortization	79		68
Amortization of cable distribution investments		5			9		Amortization of cable distribution investments	5		5
Impairment and restructuring charges		35			9		Impairment and restructuring charges	—		35
Equity-based compensation		31			27		Equity-based compensation	15		31
Other, net		(519	)		15		Other, net	(69)		(519)
Deferred income taxes		391			165		Deferred income taxes	168		391
Change in operating assets and liabilities, net of acquisitions and dispositions							Change in operating assets and liabilities, net of acquisitions and dispositions
Receivables and other assets		(193	)		(110	)	Receivables and other assets	(174)		(193)
Inventories net of program rights payable		(440	)		(358	)	Inventories net of program rights payable	(499)		(440)
Accounts payable and accrued expenses		(62	)		(113	)	Accounts payable and accrued expenses	(171)		(62)
Other changes, net		(166	)		(5	)	Other changes, net	(33)		(166)
Net cash provided by operating activities		267			202		Net cash provided by operating activities	29		267
INVESTING ACTIVITIES							INVESTING ACTIVITIES
Property, plant and equipment		(117	)		(39	)	Property, plant and equipment	(53)		(117)
Acquisitions, net of cash acquired							Acquisitions, net of cash acquired	(75)		(1)

Proceeds from dispositions, net							Proceeds from dispositions, net	82		—
Purchase of investments		(31	)		0		Purchase of investments	(29)		(31)
Other investing activities, net		(1	)		(1	)
Net cash used in investing activities		(149	)		(40	)	Net cash used in investing activities	(75)		(149)
FINANCING ACTIVITIES							FINANCING ACTIVITIES
Repurchase of shares		(267	)		0		Repurchase of shares	(250)		(267)
Non-operating cash flows from (to) The Walt Disney Company		152			(41	)
Settlement of Divestiture Tax prepayment		462			0
Non-operating cash flows from The Walt Disney Company							Non-operating cash flows from The Walt Disney Company	—		152
Settlement of Divestiture Tax Prepayment							Settlement of Divestiture Tax Prepayment	—		462
Dividends paid and distributions		(15	)		(14	)	Dividends paid and distributions	(150)		(15)

Other financing activities, net		(34	)		(1	)	Other financing activities, net	(29)		(34)
Net cash provided by (used in) financing activities		298			(56	)
Net increase in cash and cash equivalents		416			106
Net cash (used in) provided by financing activities							Net cash (used in) provided by financing activities	(429)		298
Net (decrease) increase in cash and cash equivalents							Net (decrease) increase in cash and cash equivalents	(475)		416
Cash and cash equivalents, beginning of year		4,645			3,234		Cash and cash equivalents, beginning of year	5,886		4,645
Cash and cash equivalents, end of period	$	5,061		$	3,340		Cash and cash equivalents, end of period	$	5,411	$	5,061

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

FOX CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY

(IN MILLIONS)

	Class A					Class B					Additional						Accumulated Other			Total Fox Corporation
	Common Stock					Common Stock					Paid-in			Retained			Comprehensive			Stockholders'			Noncontrolling			Total				Class A			Class B			Additional Paid-in Capital				Retained Earnings		Accumulated Other Comprehensive Loss				Total Fox Corporation Stockholders' Equity				Noncontrolling Interests(a)				Total Equity
	Shares			Amount		Shares			Amount		Capital			Earnings			Loss			Equity			Interests^(a)			Equity				Common Stock			Common Stock
																														Shares	Amount		Shares	Amount

Balance, June 30, 2021																													Balance, June 30, 2021	324	$	3	252	$	3			$	9,453					$	1,982			$	(318)			$	11,123			$	2	$	11,125
Net income																													Net income	—	—		—	—		—				701		—				701				8				709
Other comprehensive income																													Other comprehensive income	—	—		—	—		—				—		6				6				—				6
Dividends																													Dividends	—	—		—	—		—				(138)		—				(138)				—				(138)
Shares repurchased																													Shares repurchased	(5)	—		(2)	—		(114)				(136)		—				(250)				—				(250)
Other																													Other	2	—		—	—		(12)				—		—				(12)				(10)				(22)
Balance, September 30, 2021																													Balance, September 30, 2021	321	$	3	250	$	3	$	9,327			$	2,409	$	(312)			$	11,430			$	—			$	11,430
Balance, June 30, 2020		344		$	3		261		$	3	$	9,831		$	674		$	(417	)	$	10,094		$	17		$	10,111		Balance, June 30, 2020	344	$	3	261	$	3	$	9,831			$	674	$	(417)			$	10,094			$	17			$	10,111
Net income		-			0		-			0		0			1,106			0			1,106			7			1,113		Net income	—	—		—	—		—				1,106		—				1,106				7				1,113
Other comprehensive income		-			0		-			0		0			0			9			9			0			9		Other comprehensive income	—	—		—	—		—				—		9				9				—				9
Dividends declared		-			0		-			0		0			(138	)		0			(138	)		0			(138	)
Dividends																													Dividends	—	—		—	—		—				(138)		—				(138)				—				(138)
Shares repurchased		(7	)		0		(3	)		0		(161	)		(109	)		0			(270	)		0			(270	)	Shares repurchased	(7)	—		(3)	—		(161)				(109)		—				(270)				—				(270)
Other		1			0		0			0		(2	)		(8	)		0			(10	)		(9	)		(19	)	Other	1	—		—	—		(2)				(8)		—				(10)				(9)				(19)
Balance, September 30, 2020		338		$	3		258		$	3	$	9,668		$	1,525		$	(408	)	$	10,791		$	15		$	10,806		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		-			0		-			0		0			499			0			499			5			504
Other comprehensive income		-			0		-			0		0			0			4			4			0			4
Dividends declared		-			0		-			0		0			(143	)		0			(143	)		0			(143	)
Other		0			0		0			0		30			(17	)		0			13			(6	)		7
Balance, September 30, 2019		354		$	4		266		$	3	$	9,921		$	696		$	(304	)	$	10,320		$	10		$	10,330

__________________

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

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

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED 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 accompanying Unaudited Consolidated 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~~. 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 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,~~2022, 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 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, ~~2020~~2021 as filed with the Securities and Exchange Commission on August 10, ~~2020~~2021 (the ~~“2020~~“2021 Form 10-K”).

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

The Unaudited Consolidated Financial Statements include the accounts of FOX. All significant intercompany transactions and accounts within the Company’s consolidated 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 generally exists when the Company owns an interest between 20% and 50%. 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 method, which is at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same ~~issuer~~.issuer. All gains and losses on investments in equity securities are recognized in the Unaudited Consolidated Statements of ~~Operations~~.

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 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 prepayment based upon the sales price of the RSNs. This reimbursement was recorded in Other, net in the Statement of Operations (See Note 11—~~Additional Financial Information~~under the heading “Other, net”). The balance of the prepaid Divestiture Tax is subject to adjustment in the future, but any such adjustment is not expected to have a material impact on the results of the Company.

Operations.

The Company’s fiscal year ends on June 30 of each year. Certain fiscal ~~2020~~2021 amounts have been reclassified to conform to the fiscal ~~2021~~2022 presentation.

The unaudited and audited consolidated financial statements are referred to as the “Financial Statements” herein. The unaudited consolidated 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.

Recently Adopted and Recently Issued Accounting Guidance

~~Adopted~~

~~In June 2016, the Financial Accounting Standards Board (“FASB”)~~

No recently adopted or issued ~~Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), as amended. On~~July 1, 2020, the Company adopted 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 to be presented at the net amountaccounting guidance materially impacted or are expected to ~~be collected as compared to previous GAAP which delayed recognition until it was probable a loss had been incurred. The adoption of ASU 2016-13 did not have a material~~ impact on the ~~Company’s~~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 ASU~~2019-02align 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 (See Note 3—Inventories, net for additional information).~~

NOTE 2. ACQUISITIONS, DISPOSALS AND OTHER TRANSACTIONS

The Company’s acquisitions 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 three months ended September 30, 2021, the Company's acquisitions were individually not material. For the fiscal

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

2021 acquisition disclosed in Note 3—Acquisitions, Disposals and Other Transactions in the ~~2020~~2021 Form 10-K under the heading “Acquisitions and Disposals,” the accounting for ~~each~~the business combination, including consideration transferred, is based on provisional amounts and the allocation of the consideration transferred is not final. The amounts allocated to intangibles and goodwill, the estimates of useful lives and the related amortization expense are subject to changes pending the completion of the final ~~valuations~~valuation of certain assets and liabilities. A change in the allocation of consideration transferred and any estimates of useful lives could result in a change in the value allocated to the intangible assets that 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 September 30, 2020			As of June 30, 2020				As of September 30, 2021		As of June 30, 2021
	(in millions)							(in millions)
Sports programming rights	$	1,098		$	674		Sports programming rights	$	988	$	573
Entertainment programming rights		428			384		Entertainment programming rights	484		355
Total inventories, net		1,526			1,058		Total inventories, net	1,472		928
Less: current portion of inventories, net		(1,271	)		(856	)	Less: current portion of inventories, net	(1,135)		(729)
Total non-current inventories, net	$	255		$	202		Total non-current inventories, net	$	337	$	199

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~For the three months ended September 30, 2020, the~~

The aggregate amortization expense related to the programming rights was approximately $800 million and $670 million for the three months ended September 30, 2021 and 2020, respectively, which is included in Operating expenses in the ~~Statement~~Statements 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”).

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 September 30, 2020												As of September 30, 2021
	Total			Level 1			Level 2		Level 3				Total		Level 1			Level 2		Level 3
	(in millions)												(in millions)
Assets												Assets
Investments in equity securities	$	640		$	640	^(a)	$	0	$	0		Investments in equity securities	$	857	$	857	(a)	$	—	$	—
Liabilities
Other		(4	)		0			0		(4)	^(b)
Redeemable noncontrolling interests		(310	)		0			0		(310)	^(b)	Redeemable noncontrolling interests	(302)		—			—		(302)		(b)
Total	$	326		$	640		$	0	$	(314)		Total	$	555	$	857		$	—	$	(302)

Fair value measurements

As of June 30, 2020

Total

Level 1

Level 2

Level 3

(in millions)

Assets

Investments in equity securities

$
531

$
531
^(a)

$
0

$
0

Liabilities

Other

(6
)

0

0

(6)
^(b)
Redeemable noncontrolling interests

(305
)

0

0

(305)
^(b)
Total

$
220

$
531

$
0

$
(311)

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


	Fair value measurements
	As of June 30, 2021
	Total		Level 1			Level 2		Level 3
	(in millions)
Assets
Investments in equity securities	$	788	$	788	(a)	$	—	$	—
Redeemable noncontrolling interests	(261)		—			—		(261)		(b)
Total	$	527	$	788		$	—	$	(261)

⁽^a⁾


(a)			The investment categorized as Level 1 represents an investment in equity securities of Flutter Entertainment plc (“Flutter”) with a readily determinable fair value (See Note 3—Acquisitions, Disposals and Other Transactions in the ~~2020~~2021 Form 10-K under the heading “Flutter” for ~~further discussion)~~additional information).

⁽^b⁾
(b)			The Company utilizes the market approach valuation technique for its Level 3 fair value measures. Inputs to such measures could include observable market data obtained from independent sources such as broker quotes and recent market transactions for similar assets. It is the Company’s policy to maximize the use of observable inputs in the measurement of its Level 3 fair value measurements. To the extent observable inputs are not available, the Company utilizes unobservable inputs based upon the assumptions market participants would use in valuing the liability. Examples of utilized unobservable inputs are future cash flows and long-term 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 are put rights held by minority shareholders in a majority-owned sports network, ~~and in~~ Credible Labs Inc. ~~(“Credible”~~("Credible").

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

and an entertainment production company.

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


	For the three months ended September 30,
	2021		2020
	(in millions)
Beginning of period	$	(261)	$	(305)
Acquisitions(a)	(45)		—
Net loss (income)	1		(4)
Distributions	3		6
Accretion and other	—		(7)
End of period	$	(302)	$	(310)

For the three months ended
September 30,

2020

2019

(in millions)

Beginning of period

$
(305
)

$
(189
)
Net income

(4
)

(9
)
Distributions

6

8

Accretion

(7
)

(17
)
End of period

$
(310
)

$
(207
)


(a)			The increase for the three months ended September 30, 2021, was due to the acquisition of an entertainment production company.

As of September 30, ~~2020, a~~2021, the final portion of the sports network minority ~~shareholder’s~~shareholder's put right was exercisable. In October ~~2020, the sports network minority shareholder exercised its put right to sell~~2021, this portion of ~~its interest to~~ the ~~Company for approximately $135 million. The final~~minority shareholder's put right ~~held by~~expired and, as a result, approximately $110 million will be reclassified into equity in the ~~sports network minority shareholder will become exercisable in July~~Financial Statements for the three months ending December 31, 2021. The put right held by the Credible minority shareholder will become exercisable in fiscal 2025.

The put right held by the entertainment production company's minority shareholder will become exercisable in fiscal 2027.

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 method in accordance with ASC 321, approximates fair value.


	As of September 30, 2020		As of June 30, 2020			As of September 30, 2021		As of June 30, 2021
	(in millions)					(in millions)
Borrowings					Borrowings
Fair value	$	9,709	$	9,746	Fair value	$	9,460	$	9,474
Carrying value	$	7,947	$	7,946	Carrying value	$	7,953	$	7,951

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 September 30, ~~2020~~2021 and June 30, ~~2020,~~2021, the Company had ~~0 individual~~no customers that accounted for 10% or more of the Company’s receivables.

NOTE 5. BORROWINGS

Senior Notes Issued

Borrowings include senior notes (See Note 9—Borrowings in the ~~2020~~2021 Form 10-K under the heading “Public Debt – Senior Notes Issued”). Senior notes of $750 million at 3.666% are due in January 2022. 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 ~~2020~~2021 Form 10-K under the heading “Revolving Credit Agreement”). As of September 30, ~~2020,~~2021, there were 0no borrowings outstanding under the revolving credit agreement.

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

NOTE 6. STOCKHOLDERS’ EQUITY

Stock Repurchase Program

~~In fiscal 2020, the Company’s~~

The Company's Board of Directors (the ~~“Board”~~"Board") has authorized a $4 billion stock repurchase program, ~~providing for~~under which the Company can repurchase ~~of $2 billion 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”). The program has no time limit and may be modified, suspended or discontinued at any time. ~~In August 2020, the Company entered into 2 accelerated share repurchase (“ASR”) agreements to repurchase $154 million of Class A Common Stock and $66 million of Class B Common Stock.~~

In accordance with the ASR agreements, in August 2020, the Company paid a third-party financial institution $154 million and $66 million and received initial deliveries of approximately 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 each ASR agreement, at a price of $26.00 and $26.01 per share, which was

The Nasdaq Global Select Market closing share price of the Class A Common Stock and Class B Common Stock, respectively, on August 21, 2020. Upon settlement of the ASR agreements in September 2020, the Company received final deliveries of approximately 0.9 million and 0.4 million shares of Class A Common Stock and Class B Common Stock, respectively. The final number of shares purchased under the ASR agreements was determined using a price of $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 terms of the ASR agreements less a discount applicable for the Class A Common Stock). The Company accounted for each ASR agreement as two separate transactions. The initial deliveries of Class A Common Stock and Class B Common Stock were accounted for as treasury stock transactions recorded on the acquisition date. The final settlements of Class A Common Stock and Class B Common Stock were accounted for as forward contracts indexed to the Class A Common Stock or Class B Common Stock, as applicable, and qualified as equity 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 107 million shares of Common Stock for ~~$270~~approximately $250 million during the three months ended September 30, ~~2020.~~

2021.

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 September 30, ~~2020,~~2021, the Company’s remaining stock repurchase authorization was approximately ~~$1.1~~$2.15 billion. Subsequent to September 30, ~~2020,~~2021, the Company repurchased ~~a total of~~ approximately ~~1.3~~1.2 million shares of Common Stock for approximately ~~$35 million in the open market.~~

$50 million.

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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
September 30,

2020

2019

Cash dividend per share

$
0.23

$
0.23


	For the three months ended September 30,
	2021		2020
Cash dividend per share	$	0.24	$	0.23

The Company declared a semi-annual dividend of ~~$0.23~~$0.24 per share on both the Class A Common Stock and the Class B Common Stock during the three months ended September 30, ~~2020,~~2021, which was paid ~~in October 2020~~on September 29, 2021 to stockholders of record on September ~~2, 2020.~~

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

1, 2021.

NOTE 7. EQUITY-BASED COMPENSATION

~~As of~~ ~~September 30, 2020,~~ ~~the~~

The Company has 1 equity plan, the Fox Corporation 2019 Shareholder Alignment Plan ~~(the “SAP”)~~ (See Note 12—12—Equity-Based Compensation in the ~~2020~~2021 Form 10-K).

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


	For the three months ended September 30,					For the three months ended September 30,
	2020		2019			2021		2020
	(in millions)					(in millions)
Equity-based compensation	$	31	$	32	Equity-based compensation	$	15	$	31
Intrinsic value of all settled equity-based awards	$	81	$	3	Intrinsic value of all settled equity-based awards	$	76	$	81
Tax benefit on settled equity-based awards	$	14	$	0	Tax benefit on settled equity-based awards	$	17	$	14

The Company’s stock based awards are settled in Class A Common Stock. As of September 30, ~~2020,~~2021, 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~~$145 million and is expected to be recognized over a weighted average period between one and two years.

As of September 30, ~~2020~~2021 and ~~2019,~~2020, the Company had approximately 76 million and 47 million stock options outstanding, respectively. ~~For~~

Awards Vested and Granted

Restricted Stock Units

During the three months ended September 30, ~~2020~~2021 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.~~

~~Awards Granted~~2020, approximately 2.0 million and ~~Vested~~

~~Restricted Stock Units~~

~~During the three months ended September 30, 2020, approximately 1.9~~3.1 million restricted stock units (“RSUs”) vested and approximately 1.6 million and 1.9 million RSUs were granted, ~~which~~respectively. These RSUs generally 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.~~

Company.

Performance-Based Stock Options

Performance-based stock options (“PSOs”) are awards that entitle the holder to purchase a specified number of shares of Class A Common Stock at a specified price for a specified period of 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 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 related to the PSO will be recognized even if the market condition is not met.~~

During the three months ended September 30, 2021 and 2020, the Company granted approximately ~~5.0~~4 million ~~PSOs,~~and 5 million performance-based stock options, respectively, which will vest in full at the end of a three-year performance period if the market condition is met, and have a term of seven years thereafter.

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 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 September 30, ~~2020 have not changed significantly~~2021 and June 30, 2021 were approximately $46 billion and $47 billion, respectively. The decrease from ~~disclosures included in the 2020 Form 10-K.~~

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

June 30, 2021 was primarily due to sports programming rights payments.

Contingencies

FOX News

The 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 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, 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~~Twenty-First Century Fox, Inc. (now known as TFCF Corporation) ("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 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~~2021 Form 10-K under the heading “The Distribution”), the Company assumed certain costs and liabilities related to the U.K. Newspaper Matters Indemnity. The liability recorded in the Balance Sheets related to the indemnity was approximately ~~$60~~$45 million and ~~$65~~$55 million as of September 30, ~~2020~~2021 and June 30, ~~2020,~~2021, respectively.

Defamation and Disparagement Claims

From time to time, the Company and its news businesses, including FOX News Media and the FOX Television Stations, and their employees are subject to lawsuits alleging defamation or disparagement. These include lawsuits filed by Smartmatic USA Corp. and certain of its affiliates (collectively, “Smartmatic”) in February 2021 and Dominion Voting Systems, Inc. and certain of its affiliates (collectively, “Dominion”) in March 2021. The Company believes these lawsuits, including the Smartmatic and Dominion matters, are without merit and intends to defend against them vigorously. To date, none of the amounts the Company has paid in settlements of defamation or disparagement claims or reserved for pending or future claims is material, individually or in the aggregate, 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.

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

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 (as defined in Note 1—Description of Business and Basis of Presentation in the ~~2020~~2021 Form 10-K under the heading “The Distribution”)) and 21CF’s other subsidiaries, is jointly and severally liable for the U.S. federal income and, 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 entered into in connection with the Separation (as defined in Note 1—Description of Business and Basis of Presentation in the 2021 Form 10-K under the heading “The Distribution”) requires 21CF and/or The Walt Disney Company ("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 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 ~~$17~~$14 million and ~~$14~~$17 million for the three months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively.

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

NOTE 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.

•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 29 full power broadcast television stations, including 11 duopolies, in the U.S. Of these stations, 18 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.

•Television, which principally consists of the production, acquisition, marketing and distribution of broadcast network programming and free advertising-supported video-on-demand (“AVOD”) services under the FOX and Tubi brands, respectively, and the operation of 29 full power broadcast television stations, including 11 duopolies, in the U.S. Of these stations, 18 are affiliated with the FOX Network, 10 are affiliated with MyNetworkTV and 1 is an independent station.

~~Other, Corporate and Eliminations~~, which principally consists of the FOX Studio Lot, Credible, corporate overhead costs and intracompany eliminations. The FOX 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, Corporate and Eliminations, which principally consists of the FOX Studio Lot, Credible, corporate overhead costs and intracompany eliminations. The FOX 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.

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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,~~net, 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.

~~FOX CORPORATION~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

The following tables set forth the Company’s Revenues and Segment EBITDA for the three months ended September 30, ~~2020~~2021 and ~~2019:~~

2020:


	For the three months ended September 30,							For the three months ended September 30,
	2020			2019				2021		2020
	(in millions)							(in millions)
Revenues							Revenues
Cable Network Programming	$	1,325		$	1,285		Cable Network Programming	$	1,416	$	1,325
Television		1,350			1,356		Television	1,581		1,350
Other, Corporate and Eliminations		42			26		Other, Corporate and Eliminations	48		42
Total revenues	$	2,717		$	2,667		Total revenues	$	3,045	$	2,717
Segment EBITDA							Segment EBITDA
Cable Network Programming	$	781		$	684		Cable Network Programming	$	774	$	781
Television		457			251		Television	359		457
Other, Corporate and Eliminations		(72	)		(79	)	Other, Corporate and Eliminations	(69)		(72)
Amortization of cable distribution investments		(5	)		(9	)	Amortization of cable distribution investments	(5)		(5)
Depreciation and amortization		(68	)		(50	)	Depreciation and amortization	(79)		(68)
Impairment and restructuring charges		(35	)		(9	)	Impairment and restructuring charges	—		(35)
Interest expense		(99	)		(90	)
Interest income		1			17
Interest expense, net							Interest expense, net	(97)		(98)
Other, net		519			(15	)	Other, net	69		519
Income before income tax expense		1,479			700		Income before income tax expense	952		1,479
Income tax expense		(362	)		(187	)	Income tax expense	(244)		(362)
Net income		1,117			513		Net income	708		1,117
Less: Net income attributable to noncontrolling interests		(11	)		(14	)	Less: Net income attributable to noncontrolling interests	(7)		(11)
Net income attributable to Fox Corporation stockholders	$	1,106		$	499		Net income attributable to Fox Corporation stockholders	$	701	$	1,106

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Revenues by Segment by Component


	For the three months ended September 30,					For the three months ended September 30,
	2020		2019			2021		2020
	(in millions)					(in millions)
Cable Network Programming					Cable Network Programming
Affiliate fee	$	973	$	939	Affiliate fee	$	1,026	$	973
Advertising		299		254	Advertising	311		299
Other		53		92	Other	79		53
Total Cable Network Programming revenues		1,325		1,285	Total Cable Network Programming revenues	1,416		1,325
Television					Television
Advertising		670		787	Advertising	819		670
Affiliate fee		560		455	Affiliate fee	641		560
Other		120		114	Other	121		120
Total Television revenues		1,350		1,356	Total Television revenues	1,581		1,350
Other, Corporate and Eliminations		42		26	Other, Corporate and Eliminations	48		42
Total revenues	$	2,717	$	2,667	Total revenues	$	3,045	$	2,717

Future Performance Obligations

As of September 30, ~~2020,~~2021, approximately ~~$5.1~~$4.5 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, sports advertising contracts and 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 September 30,
	2021		2020
	(in millions)
Depreciation and amortization
Cable Network Programming	$	10	$	13
Television	26		25
Other, Corporate and Eliminations	43		30
Total depreciation and amortization	$	79	$	68


	As of September 30, 2021		As of June 30, 2021
	(in millions)
Assets
Cable Network Programming	$	2,557	$	2,577
Television	8,162		7,305
Other, Corporate and Eliminations	11,444		12,145
Investments	998		899
Total assets	$	23,161	$	22,926

For the three months ended
September 30,

2020

2019

(in millions)

Depreciation and amortization

Cable Network Programming

$
13

$
13

Television

25

15

Other, Corporate and Eliminations

30

22

Total depreciation and amortization

$
68

$
50

As of
September 30,
2020

As of
June 30,
2020

(in millions)

Assets

Cable Network Programming

$
2,622

$
2,591

Television

7,703

7,054

Other, Corporate and Eliminations

11,417

11,487

Investments

755

618

Total assets

$
22,497

$
21,750

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 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 September 30,
	2020			2019					For the three months ended September 30,
	(in millions)								2021				2020
Transaction costs^(a)	$	451		$	(45	)
									(in millions)
Net gains on investments in equity securities^(b)(a)		121			49		$	63			$	121
Transaction costs(b)							Transaction costs(b)		(12)				451
Other		(53	)		(19	)	Other		18				(53)
Total other, net	$	519		$	(15	)	Total other, net		$	69			$	519

^(a)	The transaction costs for the 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⁾
(a)			Net gains on investments in equity securities for the three months ended September 30, 2021 and for 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~~.


(b)			The transaction costs for the three months ended September 30, ~~2019 included the gains~~2020 are primarily related to the ~~changes in fair value~~substantially resolved settlement from Disney of $462 million related to the reimbursement of the Company’s ~~investments~~prepayment of its share of the Divestiture Tax (as defined in ~~Roku, Inc.~~Note 1—Description of Business and ~~The Stars Group Inc.~~ ~~(See~~ ~~Note 6—Fair Value~~Basis of Presentation in the ~~2020~~2021 Form 10-K).

~~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 September 30, 2020		As of June 30, 2020			As of September 30, 2021		As of June 30, 2021
	(in millions)					(in millions)
Investments^(a)	$	755	$	618	Investments(a)	$	998	$	899
Operating lease ROU assets		505		539	Operating lease ROU assets	484		469
Inventories, net					Inventories, net	337		199
Grantor Trust		260		247	Grantor Trust	298		304
Inventories, net		255		202
Other		165		195	Other	173		187
Total other non-current assets	$	1,940	$	1,801	Total other non-current assets	$	2,290	$	2,058

^(a)


(a)			Included investments accounted for at fair value on a recurring basis of ~~$640~~$857 million and ~~$531~~$788 million as of September 30, ~~2020~~2021 and June 30, ~~2020,~~2021, respectively (See Note 4—Fair Value).

FOX CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED 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 September 30, 2020		As of June 30, 2020			As of September 30, 2021		As of June 30, 2021
	(in millions)					(in millions)
Accrued expenses	$	871	$	907	Accrued expenses	$	842	$	1,077
Program rights payable		524		485	Program rights payable	686		659
Deferred revenue		242		152	Deferred revenue	212		196
Operating lease liabilities		104		122	Operating lease liabilities	95		92
Other current liabilities		271		240	Other current liabilities	284		229
Total accounts payable, accrued expenses and other current liabilities	$	2,012	$	1,906	Total accounts payable, accrued expenses and other current liabilities	$	2,119	$	2,253

Other Liabilities

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


	As of September 30, 2020		As of June 30, 2020			As of September 30, 2021		As of June 30, 2021
	(in millions)					(in millions)
Accrued non-current pension/postretirement liabilities	$	710	$	709	Accrued non-current pension/postretirement liabilities	$	574	$	586
Non-current operating lease liabilities		432		452	Non-current operating lease liabilities	423		409
Other non-current liabilities		280		321	Other non-current liabilities	360		341
Total other liabilities	$	1,422	$	1,482	Total other liabilities	$	1,357	$	1,336

Supplemental ~~Cash Flows~~ Information

For the three months ended
September 30,

2020

2019

(in millions)

Cash paid for interest

$
(169
)

$
(171
)
Cash paid for income taxes

$
(86
)

$
(6
)


	For the three months ended September 30,
	2021		2020
	(in millions)
Supplemental cash flows information
Cash paid for interest	$	(168)	$	(169)
Cash paid for income taxes	$	(66)	$	(86)

Supplemental information on acquisitions
Fair value of assets acquired, excluding cash	$	120	$	—
Cash acquired	—		—
Liabilities assumed	—		—
Noncontrolling interests	(45)		—
Cash paid	(75)		—
Fair value of equity instruments consideration	$	—	$	—

~~ITEM 2.~~

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 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, ~~2020~~ 2021 as filed with the SEC on August 10, ~~2020~~2021 (the ~~“2020~~“2021 Form 10-K”). The unaudited consolidated financial statements are referred to as the “Financial Statements” herein.

INTRODUCTION

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 months ended September 30, 2020 and 2019 that the Company believes are important in understanding its results of operations and financial condition or to disclose known trends.

•Overview of the Company’s Business—This section provides a general description of the Company’s businesses, as well as developments that occurred during the three months ended September 30, 2021 and 2020 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 months ended September 30, 2020 and 2019. This analysis is presented on both a 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.

•Results of Operations—This section provides an analysis of the Company’s results of operations for the three months ended September 30, 2021 and 2020. This analysis is presented on both a 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 three months ended September 30, 2020 and 2019, as well as a discussion of the Company’s outstanding debt and commitments, both firm and contingent, that existed as of 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.

•Liquidity and Capital Resources—This section provides an analysis of the Company’s cash flows for the three months ended September 30, 2021 and 2020, as well as a discussion of the Company’s outstanding debt and commitments, both firm and contingent, that existed as of September 30, 2021. 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 2020 Form 10-K for a discussion of the risk factors applicable to the Company.

•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 2021 Form 10-K and Part II., Item 1A, “Risk Factors” in this Quarterly Report on 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 29 full power broadcast television stations, including 11 duopolies, in the U.S. Of these stations, 18 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 the FOX Studio Lot, Credible Labs Inc. (“Credible”), corporate overhead costs and intracompany eliminations. The FOX 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~~

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 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~~distributors (“~~MVPD”~~digital MVPDs”), primarily in the U.S.

•Television, which principally consists of the production, acquisition, marketing and distribution of broadcast network programming and free advertising-supported video-on-demand (“AVOD”) services ~~that adversely affect~~under the ~~Company’s affiliate fee~~FOX and ~~advertising revenues. In addition,~~Tubi brands, respectively, and the ~~Company’s business depends on~~operation of 29 full power broadcast television stations, including 11 duopolies, in the ~~volume~~U.S. Of these stations, 18 are affiliated with the FOX Network, 10 are affiliated with MyNetworkTV and ~~popularity~~one is an independent station.

•Other, Corporate and Eliminations, which principally consists 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~~FOX Studio Lot, Credible Labs Inc. (“Credible”), corporate overhead costs and ~~the~~intracompany eliminations. The FOX Studio Lot, located in Los Angeles, California, provides television and film production ~~of certain entertainment content the Company distributes has been suspended. Although some of these sports events~~services along with office space, studio operation services 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 ofincludes all 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 estimates that the 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~~facility. Credible is 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 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 prepayment based upon the sales price of the RSNs. This reimbursement was recorded in Other, net in the Statement of Operations. See Note 11—Additional Financial Information to the accompanying Financial Statements under the heading “Other, net.”

U.S. consumer finance marketplace.

RESULTS OF OPERATIONS

Results of Operations—For the three months ended September 30, ~~2020~~2021 versus the three months ended September 30, ~~2019~~

2020

The following table sets forth the Company’s operating results for the three months ended September 30, ~~2020,~~2021, as compared to the three months ended September 30, ~~2019:~~

2020:


	For the three months ended September 30,														For the three months ended September 30,
	2020			2019			Change			% Change					2021		2020		Change		% Change
(in millions, except %)							Better/(Worse)							(in millions, except %)					Better/(Worse)
Revenues														Revenues
Affiliate fee	$	1,533		$	1,394		$	139			10		%	Affiliate fee	$	1,667	$	1,533	$	134	9	%
Advertising		969			1,041			(72	)		(7	)	%	Advertising	1,130		969		161		17	%
Other		215			232			(17	)		(7	)	%	Other	248		215		33		15	%
Total revenues		2,717			2,667			50			2		%	Total revenues	3,045		2,717		328		12	%
Operating expenses		(1,168	)		(1,468	)		300			20		%	Operating expenses	(1,571)		(1,168)		(403)		(35)	%
Selling, general and administrative		(388	)		(352	)		(36	)		(10	)	%	Selling, general and administrative	(415)		(388)		(27)		(7)	%
Depreciation and amortization		(68	)		(50	)		(18	)		(36	)	%	Depreciation and amortization	(79)		(68)		(11)		(16)	%
Impairment and restructuring charges		(35	)		(9	)		(26	)	**				Impairment and restructuring charges	—		(35)		35		100	%
Interest expense		(99	)		(90	)		(9	)		(10	)	%
Interest income		1			17			(16	)		(94	)	%
Interest expense, net														Interest expense, net	(97)		(98)		1		1	%
Other, net		519			(15	)		534		**				Other, net	69		519		(450)		(87)	%
Income before income tax expense		1,479			700			779		**				Income before income tax expense	952		1,479		(527)		(36)	%
Income tax expense		(362	)		(187	)		(175	)		(94	)	%	Income tax expense	(244)		(362)		118		33	%
Net income		1,117			513			604		**				Net income	708		1,117		(409)		(37)	%
Less: Net income attributable to noncontrolling interests		(11	)		(14	)		3			21		%	Less: Net income attributable to noncontrolling interests	(7)		(11)		4		36	%
Net income attributable to Fox Corporation stockholders	$	1,106		$	499		$	607		**				Net income attributable to Fox Corporation stockholders	$	701	$	1,106	$	(405)	(37)	%

^**	~~not meaningful~~

~~Overview~~—Overview—The Company’s revenues increased 2%12% for the three months ended September 30, ~~2020,~~2021, as compared to the corresponding period of fiscal ~~2020,~~2021, due to higher affiliate fee, ~~revenue, partially offset by lower~~ advertising and other revenues. The increase in affiliate fee revenue was primarily attributable to higher average rates per subscriber, ~~across all networks,~~ led by contractual rate increases on existing affiliate agreements and from affiliate agreement renewals, ~~and on existing affiliate agreements.~~partially offset by a lower average number of subscribers. The ~~decrease~~increase in advertising revenue was primarily due to ~~fewer broadcasts~~growth at Tubi and the strength of ~~NFL programming~~the schedule of live events at FOX Sports and~~the postponement of college football games and certain~~ original scripted programming at FOX Entertainment as compared to the ~~FOX Network as a result of COVID-19,~~prior year quarter, which was impacted by coronavirus disease 2019 ("COVID-19"), partially offset by ~~higher~~lower political advertising revenue ~~related~~at the FOX Television Stations due to the ~~2020~~absence of the prior year presidential and congressional elections ~~and~~in the ~~impact of the consolidation of Tubi.~~current quarter. The ~~decrease~~increase in other revenues was primarily due to ~~lower~~higher sports sublicensing ~~revenue~~revenues related to college sports ~~as a result of COVID-19, lower digital content licensing revenue at the FOX Network~~ and ~~the absence of~~higher revenues generated from Premier Boxing Champions ~~(“PBC”~~("PBC") pay-per-view events ~~at FS1,~~due to the impact of COVID-19 in the prior year quarter and higher FOX Nation subscription revenues, partially offset by the impact of the ~~consolidation~~divestiture of ~~Credible in fiscal 2020.~~the Company's sports marketing businesses.

Operating expenses ~~decreased 20%~~increased 35% for the three months ended September 30, ~~2020,~~2021, as compared to the corresponding period of fiscal ~~2020,~~2021, primarily due to ~~lower~~higher sports ~~programming rights amortization~~ and ~~production costs, including the broadcast of fewer NFL and college football games, and lower~~ entertainment programming rights amortization as a result of a higher number of live events and ~~advertising and promotion costs due to fewer~~more hours of original scripted programming as ~~a result of COVID-19, partially offset~~compared to the prior year quarter which was impacted by ~~the consolidation of Tubi~~COVID-19. Also contributing to this increase was higher sports production costs and an increased digital investment in ~~fiscal 2020.~~

Tubi.

Selling, general and administrative expenses increased ~~10%~~7% for the three months ended September 30, ~~2020,~~2021, as compared to the corresponding period of fiscal ~~2020,~~2021, primarily due to higher digital marketing initiatives at FOX News Media including costs associated with the ~~impact~~launch of acquisitions that occurred in fiscal 2020 (the “Fiscal 2020 Acquisitions”) (See Note 3—Acquisitions, Disposals and Other Transactions in the 2020 Form 10-K under the heading “Acquisitions and Disposals” for additional information).

FOX Weather.

Depreciation and amortization—Depreciation and amortization expense increased ~~36%~~16% for the three months ended September 30, ~~2020,~~2021, as compared to the corresponding period of fiscal ~~2020, primarily~~ ~~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 fiscal 2020,~~2021, primarily due to ~~higher severance costs principally at the Cable Network Programming segment (See Note 11~~—~~Additional Financial Information to the accompanying Financial Statements).~~

~~Interest expense~~—~~Interest expense increased 10%~~assets placed into service for the ~~three months ended September 30, 2020, as compared to the corresponding period of fiscal 2020, primarily due to~~ Company's new standalone broadcast technical facilities.

Other, net~~the issuance of $1.2 billion of senior notes in April 2020 (~~—See Note ~~9—Borrowings in the 2020 Form 10-K under the heading “Public Debt – Senior Notes Issued”~~ ~~for additional information)~~.

~~Interest income~~—~~Interest income decreased for the three months ended September 30, 2020, as compared to the corresponding period of fiscal 2020,~~ ~~primarily due to lower interest rates.~~

~~Other, net~~—~~See Note 11~~—11—Additional Financial Information to the accompanying Financial Statements under the heading “Other, net.”

Income tax expense—The Company’s tax provision and related effective tax rate of 26% for the three months ended September 30, 2021 was higher than the statutory rate of 21% primarily due to state taxes and other permanent items.

The Company’s tax provision and related effective tax rate of 24% for the three months ended September 30, 2020 was higher than the statutory rate of 21% primarily due to state taxes, partially offset by a benefit from the reduction of uncertain tax positions for state tax audits.

Net income

~~The Company’s tax provision and related effective tax rate of 27%~~—Net income decreased 37% for the three months ended 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 $604 million for the three months ended September 30, 2020,~~2021, as compared to the corresponding period of fiscal ~~2020,~~2021, primarily due to the ~~receipt~~substantially resolved settlement from The Walt Disney Company ("Disney") of $462 million related to the reimbursement of the ~~$462 million reimbursement from Disney related to~~Company’s prepayment of its share of the Divestiture Tax (See Note ~~1—Description of Business and Basis of Presentation~~11—Additional Financial Information to the accompanying Financial Statements ~~for additional information) and higher Segment EBITDA (as defined below) at~~under the ~~Television and Cable Network Programming segments, partially offset by higher Income tax expense.~~heading “Other, net.”).

Segment Analysis

The following tables set forth the Company’s Revenues and Segment EBITDA for the three months ended September 30, ~~2020,~~2021, as compared to the three months ended September 30, ~~2019:~~2020:


	For the three months ended September 30,
	2021		2020		Change		% Change
(in millions, except %)					Better/(Worse)
Revenues
Cable Network Programming	$	1,416	$	1,325	$	91	7	%
Television	1,581		1,350		231		17	%
Other, Corporate and Eliminations	48		42		6		14	%
Total revenues	$	3,045	$	2,717	$	328	12	%


	For the three months ended September 30,											For the three months ended September 30,
	2020		2019		Change			% Change				2021		2020		Change		% Change
(in millions, except %)					Better/(Worse)						(in millions, except %)					Better/(Worse)
Revenues
Segment EBITDA											Segment EBITDA
Cable Network Programming	$	1,325	$	1,285	$	40			3	%	Cable Network Programming	$	774	$	781	$	(7)	(1)	%
Television		1,350		1,356		(6	)		-	%	Television	359		457		(98)		(21)	%
Other, Corporate and Eliminations		42		26		16			62	%	Other, Corporate and Eliminations	(69)		(72)		3		4	%
Total revenues	$	2,717	$	2,667	$	50			2	%
Adjusted EBITDA(a)											Adjusted EBITDA(a)	$	1,064	$	1,166	$	(102)	(9)	%

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

%

^(a)


(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 ~~(49~~% (47% and ~~48%~~ 49% of the Company’srevenues forthe firstthree months offiscal 2022 and 2021, ~~and 2020,~~ respectively)


	For the three months ended September 30,														For the three months ended September 30,
	2020			2019			Change			% Change					2021		2020		Change		% Change
(in millions, except %)							Better/(Worse)							(in millions, except %)					Better/(Worse)
Revenues														Revenues
Affiliate fee	$	973		$	939		$	34			4		%	Affiliate fee	$	1,026	$	973	$	53	5	%
Advertising		299			254			45			18		%	Advertising	311		299		12		4	%
Other		53			92			(39	)		(42	)	%	Other	79		53		26		49	%
Total revenues		1,325			1,285			40			3		%	Total revenues	1,416		1,325		91		7	%
Operating expenses		(434	)		(520	)		86			17		%	Operating expenses	(523)		(434)		(89)		(21)	%
Selling, general and administrative		(115	)		(90	)		(25	)		(28	)	%	Selling, general and administrative	(124)		(115)		(9)		(8)	%
Amortization of cable distribution investments		5			9			(4	)		(44	)	%	Amortization of cable distribution investments	5		5		—		—	%
Segment EBITDA	$	781		$	684		$	97			14		%	Segment EBITDA	$	774	$	781	$	(7)	(1)	%

Revenues at the Cable Network Programming segment increased 3%7% for the three months ended September 30, ~~2020,~~2021, as compared to the corresponding period of fiscal ~~2020,~~2021, due to higher affiliate fee, ~~and~~ advertising ~~revenues, partially offset by lower~~and 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,~~MVPD subscribers, partially offset by an increase in digital MVPD subscribers. The increase in advertising revenue was primarily due to a higher number of live sports events compared to the ~~2020 presidential election which drove higher linear advertising revenue,~~prior year quarter, including ~~higher pricing~~the return to a full college football schedule that was shortened due to COVID-19 in the prior year quarter and ~~ratings, and~~increased digital advertising revenue at FOX News Media, partially offset by lower political advertising revenue at FOX News Media due to the ~~broadcast~~absence of ~~fewer live sports events, including college football, as a result of COVID-19.~~the prior year presidential and congressional elections in the current year quarter. The ~~decrease~~increase in other revenues was primarily ~~attributable~~due to ~~lower~~higher sports sublicensing ~~revenue~~revenues and ~~the absence of~~ revenues generated from PBC pay-per-view events ~~principally as a result~~that were canceled in the prior year quarter because of COVID-19, and higher FOX Nation subscription revenues, partially offset by ~~higher revenues at FOX News Media.~~

the impact of the divestiture of the Company's sports marketing businesses.

Cable Network Programming Segment EBITDA ~~increased 14%~~decreased 1% for the three months ended September 30, ~~2020,~~2021, as compared to the corresponding period of fiscal ~~2020, due to~~2021, as the revenue increases noted above ~~and lower~~were offset by higher expenses. Operating expenses ~~decreased~~increased for the three months ended September 30, ~~2020~~2021 primarily due to ~~lower sports programming rights amortization and production costs driven~~the return of a full college football schedule, as the 2020 season was impacted by ~~the postponement of live sports events,~~COVID-19, partially offset by the ~~shift~~absence of events that were shifted into the prior year quarter, including National Association of Stock Car Auto Racing (“NASCAR”) Cup Series races and additional Major League Baseball

~~(“MLB”~~ ("MLB") regular season games, ~~into the first quarter of fiscal 2021~~ as a result of ~~COVID-19.~~COVID-19 rescheduling. Selling, general and administrative expenses increased for ~~the~~ three months ended September 30, ~~2020~~2021 principally due to higher ~~legal and marketing expenses~~investment in digital growth initiatives at FOX News ~~Media.~~Media, including costs associated with the launch of FOX Weather.

Television ~~(50~~%(52% and 51% 50% of the Company’srevenues forthe first three months offiscal 2022 and 2021, ~~and2020,~~ respectively)


	For the three months ended September 30,
	2021		2020		Change		% Change
(in millions, except %)					Better/(Worse)
Revenues
Advertising	$	819	$	670	$	149	22	%
Affiliate fee	641		560		81		14	%
Other	121		120		1		1	%
Total revenues	1,581		1,350		231		17	%
Operating expenses	(1,026)		(714)		(312)		(44)	%
Selling, general and administrative	(196)		(179)		(17)		(9)	%
Segment EBITDA	$	359	$	457	$	(98)	(21)	%

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 17% for the three months ended September 30, ~~2020 remained consistent,~~2021, as compared to the corresponding period of fiscal ~~2020, as~~2021, due to higher advertising, affiliate fee, and other ~~revenues were offset by lower advertising revenue.~~revenues. The ~~decrease~~increase in advertising revenue was primarily ~~due~~attributable to ~~fewer broadcasts~~growth at Tubi, the return of ~~NFL programming, the postponement~~a full schedule of college football ~~games~~ and ~~certain~~the MLB All-Star Game and more original scripted programming at FOX Entertainment due to the impact of COVID-19 in the prior year quarter. Partially offsetting the increase in advertising revenue was lower political advertising revenue at the FOX ~~Network as a result of COVID-19 and~~Television Stations due to the absence of the prior year ~~broadcast of the~~ ~~71st Annual Primetime Emmy Awards. Partially offsetting the decrease in advertising revenue was higher political advertising revenue related to the 2020~~ presidential and congressional ~~elections at the FOX Television Stations and the impact of the consolidation of Tubi.~~elections. 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, partially offset by a lower average number of subscribers, at the Company’s owned and operated television stations.

Television Segment EBITDA ~~increased 82%~~decreased 21% for the three months ended September 30, ~~2020,~~2021, as compared to the corresponding period of fiscal ~~2020,~~2021, as the revenue increases noted above were more than offset by higher expenses. Operating expenses increased primarily due to ~~lower expenses. Operating expenses decreased primarily due to lower~~higher sports programming rights amortization and production costs, including ~~the broadcast~~a higher number of ~~fewer NFL~~live events, increased digital investment at Tubi, and ~~college football games, and lower~~higher entertainment programming rights amortization and ~~advertising and~~ marketing costs due to ~~fewer~~more hours of original scripted programming as ~~a result of COVID-19, partially offset~~compared to the prior year quarter which was impacted by ~~the impact of the consolidation of Tubi.~~

COVID-19.

Other, Corporate and Eliminations (1% (1% of the Company’srevenues forthe first three months offiscal ~~2021~~2022 and ~~2020)~~2021)


	For the three months ended September 30,
	2021		2020		Change		% Change
(in millions, except %)					Better/(Worse)
Revenues	$	48	$	42	$	6	14	%
Operating expenses	(22)		(20)		(2)		(10)	%
Selling, general and administrative	(95)		(94)		(1)		(1)	%
Segment EBITDA	$	(69)	$	(72)	$	3	4	%

For the three months ended September 30,

2020

2019

Change

% Change
(in millions, except %)

Better/(Worse)
Revenues

$
42

$
26

$
16

62

%

Operating expenses

(20
)

(5
)

(15
)

**

Selling, general and administrative

(94
)

(100
)

6

6

%

Segment EBITDA

$
(72
)

$
(79
)

$
7

9

%

^**	~~not meaningful~~

Revenues at the Other, Corporate and Eliminations segment increased ~~62%~~14% for the three months ended September 30, ~~2020,~~2021, as compared to the corresponding period of fiscal ~~2020, primarily~~2021, due to higher revenues from operating the ~~impact of~~FOX Studio Lot as compared to the ~~consolidation of~~prior year quarter which was impacted by COVID-19 and growth at Credible. Operating expenses increased ~~principally due to the impact of the consolidation of Credible. Selling, general and administrative expenses decreased~~ primarily due to ~~lower employee costs and professional fees, partially offset by the impact of the consolidation of~~growth at Credible.

Non-GAAP Financial Measures

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,~~net, Other, net and Income tax expense.

Management believes that information about Adjusted EBITDA assists all users of the Company’s 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 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 months ended September 30, ~~2020,~~2021, as compared to the three months ended September 30, ~~2019:~~

2020:


	For the three months ended September 30,							For the three months ended September 30,
	2020			2019				2021		2020
	(in millions)							(in millions)
Net income	$	1,117		$	513		Net income	$	708	$	1,117
Add							Add
Amortization of cable distribution investments		5			9		Amortization of cable distribution investments	5		5
Depreciation and amortization		68			50		Depreciation and amortization	79		68
Impairment and restructuring charges		35			9		Impairment and restructuring charges	—		35
Interest expense		99			90
Interest income		(1	)		(17	)
Interest expense, net							Interest expense, net	97		98
Other, net		(519	)		15		Other, net	(69)		(519)
Income tax expense		362			187		Income tax expense	244		362
Adjusted EBITDA	$	1,166		$	856		Adjusted EBITDA	$	1,064	$	1,166

The following table sets forth the computation of Adjusted EBITDA for the three months ended September 30, ~~2020,~~2021, as compared to the three months ended September 30, ~~2019:~~

2020.


	For the three months ended September 30,
	2021		2020
	(in millions)
Revenues	$	3,045	$	2,717
Operating expenses	(1,571)		(1,168)
Selling, general and administrative	(415)		(388)
Amortization of cable distribution investments	5		5
Adjusted EBITDA	$	1,064	$	1,166

For the three months ended September 30,

2020

2019

(in millions)

Revenues

$
2,717

$
2,667

Operating expenses

(1,168
)

(1,468
)
Selling, general and administrative

(388
)

(352
)
Amortization of cable distribution investments

5

9

Adjusted EBITDA

$
1,166

$
856

LIQUIDITY AND CAPITAL RESOURCES

Current FinancialCondition

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, 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~~$5.4 billion of cash and cash equivalents as of September 30, ~~2020~~2021 and an unused five-year $1.0 billion unsecured revolving credit facility (See Note 5—Borrowings to the accompanying Financial Statements). The Company also has access to the worldwide capital markets, subject to market ~~conditions which could be impacted by COVID-19.~~conditions. As of September 30, ~~2020,~~2021, 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 the continued investment in establishing the Company’s standalone broadcast technical facilities following the Distribution (as defined in Note 1—Description of Business and Basis of Presentation in the 2020 Form 10-K under the heading “The Distribution”);programming; 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.

Sources and Uses of Cash

Net cash provided by operating activities for the three months ended September 30, ~~2020~~2021 and ~~2019~~2020 was as follows (in millions):

For the three months ended September 30,

2020

2019

Net cash provided by operating activities

$
267

$
202


For the three months ended September 30,	2021		2020
Net cash provided by operating activities	$	29	$	267

The ~~increase~~decrease in net cash provided by operating activities during the three months ended September 30, ~~2020,~~2021, as compared to the corresponding period of fiscal ~~2020,~~2021, was primarily due to ~~higher~~lower Segment EBITDA, ~~partially offset by contractual increases for~~as well as higher sports and entertainment programming ~~rights, higher inventory balances due to~~payments as a result of the ~~postponement~~prior year impact of ~~certain sports events and higher tax payments.~~

COVID-19.

Net cash used in investing activities for the three months ended September 30, ~~2020~~2021 and ~~2019~~2020 was as follows (in millions):


For the three months ended September 30,	2020			2019			For the three months ended September 30,	2021		2020
Net cash used in investing activities	$	(149	)	$	(40	)	Net cash used in investing activities	$	(75)	$	(149)

The ~~increase~~decrease in net cash used in investing activities during the three months ended September 30, ~~2020,~~2021, as compared to the corresponding period of fiscal ~~2020,~~2021, was primarily due to proceeds from the disposition of property, plant and equipment and the absence of payments related to ~~investments in establishing~~ the ~~Company’s~~Company's new standalone broadcast technical ~~facilities.~~

facilities, which were placed into service in fiscal 2021, partially offset by fiscal 2022 acquisitions and investments.

Net cash (used in) provided by ~~(used in)~~ financing activities for ~~the~~ three months ended September 30, ~~2020~~2021 and ~~2019~~2020 was as follows (in millions):


For the three months ended September 30,	2020		2019			For the three months ended September 30,	2021		2020
Net cash provided by (used in) financing activities	$	298	$	(56	)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	$	(429)	$	298

The change in net cash (used in) provided by ~~(used in)~~ financing activities during the three months ended September 30, ~~2020,~~2021, as compared to the corresponding prior year period of fiscal ~~2020,~~2021, was primarily due to the ~~receipt~~absence of the $462 million reimbursement from Disney related to the ~~Divesture~~Divestiture Tax ~~partially offset by activity under~~in fiscal 2021 and the ~~stock repurchase program.~~

timing of dividends paid to the Company’s stockholders in fiscal 2022.

Stock Repurchase Program

See Note 6—Stockholders’ Equity to the accompanying Financial Statements under the heading “Stock Repurchase Program.”

Dividends

The Company declared a semi-annual dividend of ~~$0.23~~$0.24 per share on both the Class A Common Stock and the Class B Common Stock during the three months ended September 30, ~~2020,~~2021, which was paid in ~~October 2020~~September 29, 2021 to stockholders of record on September ~~2, 2020.~~

1, 2021.

Debt Instruments

Borrowings include senior notes (See Note 9—Borrowings toin the ~~2020~~2021 Form 10-K under the heading “Public Debt – Senior Notes Issued”).

Ratings of the senior notes

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

2021:

~~Rating Agency~~

~~Senior Debt~~

~~Outlook~~

~~Moody's~~

Rating Agency

~~Baa2~~

Senior Debt

~~Stable~~

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 5—Borrowings to the accompanying Financial Statements).

Commitments and Contingencies

See Note 8—Commitments and Contingencies to the accompanying Financial Statements.

Recent Accounting Pronouncements

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

~~Caution Concerning Forward-Looking Statements~~

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; and (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:

•

~~the impact of COVID-19 and other widespread health emergencies or pandemics and measures to contain their spread and related weak macroeconomic conditions and increased market volatility;~~

•the impact of COVID-19 and other widespread health emergencies or pandemics and measures to contain their spread and related weak macroeconomic conditions and increased market volatility;

~~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 estimated revenues or the expected popularity of the Company’s programming;

•the impact of COVID-19 specifically on the Company, including content disruptions that negatively affect the timing, 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 estimated revenues or the 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, and related impacts on advertisers and traditional MVPDs;

•evolving technologies and distribution platforms and changes in consumer behavior as consumers seek more control over when, where and how they consume content, and related impacts on advertisers and 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;

•declines in advertising expenditures due to various factors such as the economic prospects of advertisers or the economy, major sports events and elections cycles, evolving technologies and

the failure to enter into or renew on favorable terms, or at all, affiliation or carriage agreements or arrangements through which the Company 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;~~

distribution platforms and related changes in consumer behavior and shifts in advertisers’ expenditures, the evolving market for AVOD advertising campaigns, and audience measurement methodologies’ ability to accurately reflect actual viewership levels;

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

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

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

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

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

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

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

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

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

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

•damage to the Company’s brands or reputation;

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

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

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

•the loss of key personnel;

~~the loss of key personnel;~~

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

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

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

•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;

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

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

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

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

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

•changes in tax, federal communications or other laws, regulations, practices or the interpretations thereof (including changes in legislation currently being considered);

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

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

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

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

the Company’s 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;

•unfavorable litigation or investigation results that require the Company to pay significant amounts or lead to onerous operating procedures;

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;

•changes in GAAP or other applicable accounting standards and policies;

the Company’s reliance on 21CF to provide the Company various services during transition periods under transition services 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 these agreements or that the Company is unable to provide or obtain such services following the applicable transition period (or during such transition period, if 21CF does not properly provide them in a timely and cost effective manner);

•the Company’s ability to achieve the benefits it expects to achieve as a standalone, publicly traded company;

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

•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 (as defined in Note 1—Description of Business and Basis of Presentation in the 2020 Form 10-K); and

•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 2021 Form 10-K) and the indemnification arrangements entered into in connection with the Separation and the Distribution (as defined in Note 1—Description of Business and Basis of Presentation in the 2021 Form 10-K); and

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

•the other risks and uncertainties detailed in Part I., Item 1A. “Risk Factors” in the 2021 Form 10-K and Part II., Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q.

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

~~ITEM 3.~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the market risks reported in the ~~2020~~2021 Form 10-K.

~~ITEM 4.~~

ITEM 4. CONTROLS AND PROCEDURES

(a)Disclosure Controls and Procedures

~~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.~~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

~~Changes in Internal Control over Financial Reporting~~

~~There~~

During the first quarter of fiscal 2022, the Company implemented new general ledger and procure-to-pay systems. This company-wide implementation involved migrating multiple legacy systems, some of which were subject to a Twenty-First Century Fox, Inc. transition services agreement, to a common platform. In connection with this implementation, the Company has implemented updates and changes to its processes and related control activities.

Other than as stated in the previous paragraph, 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 first quarter of fiscal ~~2021~~2022 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.~~

ITEM 1. LEGAL PROCEEDINGS

~~There have been no material changes~~

See Note 8—Commitments and Contingencies to the accompanying Unaudited Consolidated Financial Statements of FOX under the heading “Contingencies” for a discussion of 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”).

proceedings.

~~ITEM 1A.~~

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors described in the section titled “Risk Factors” in the ~~2020~~Company’s Annual Report on Form ~~10-K.~~

10-K for the fiscal year ended June 30, 2021 as filed with the Securities and Exchange Commission on August 10, 2021, except as set forth below:

Technological developments may increase the threat of content piracy and signal theft and limit the Company’s ability to protect its intellectual property rights.

Content piracy and signal theft present a threat to the Company’s revenues from products and services, including television shows, cable and other programming. The Company seeks to limit the threat of content piracy as well as cable and direct broadcast satellite programming signal theft; however, policing unauthorized use of the Company’s products and services and related intellectual property is often difficult and the steps taken by the Company may not in every case prevent infringement. Although no content theft has been material to the Company’s businesses to date, we expect to continue to be subject to content threats and there can be no assurance that we will not experience a material incident. Developments in technology, including digital copying, file compression technology, growing penetration of high-bandwidth Internet connections, increased availability and speed of mobile data networks, and new devices and applications that enable unauthorized access to content, increase the threat of content piracy by making it easier to access, duplicate, widely distribute and store high-quality pirated material. In addition, developments in software or devices that circumvent encryption technology and the falling prices of devices incorporating such technologies increase the threat of unauthorized use and distribution of direct broadcast satellite programming signals and the proliferation of user-generated content sites and live and stored video streaming sites, which deliver unauthorized copies of copyrighted content, including those emanating from other countries in various languages, may adversely impact the Company’s businesses. The proliferation of unauthorized distribution and use of the Company’s content could have an adverse effect on the Company’s businesses and profitability because it reduces the revenue that the Company could potentially receive from the legitimate sale and distribution of its products and services.

The Company takes a variety of actions to combat piracy and signal theft, both individually and, in some instances, together with industry associations, but the protection of the Company’s intellectual property rights depends on the scope and duration of the Company’s rights as defined by applicable laws in the U.S. and abroad and how those laws are construed. If those laws are interpreted in ways that limit the extent or duration of the Company’s rights or if existing laws are changed, the Company’s ability to generate revenue from intellectual property may decrease or the cost of obtaining and enforcing our rights may increase. A change in the laws of one jurisdiction may also have an impact on the Company’s overall ability to protect its intellectual property rights across other jurisdictions. The Company’s efforts to enforce its rights and protect its products, services and intellectual property may not be successful in preventing content piracy or signal theft. Further, while piracy and the proliferation of piracy-enabling technology tools continue to escalate, if any laws intended to combat piracy and protect intellectual property are repealed, weakened or not adequately enforced, or if the applicable legal systems fail to evolve and adapt to new technologies that facilitate piracy, we may be unable to effectively protect our rights and the value of our intellectual property may be negatively impacted, and our costs of enforcing our rights could increase.

~~ITEM 2.~~

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 September 30, ~~2020:~~

2021:

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)

July 1, 2020 – July 31, 2020

Class A common stock

-

$
-

Class B common stock

-

-

August 1, 2020 – August 31, 2020

Class A common stock^(d)

5,821,538

27.23

Class B common stock^(d)

2,322,772

27.44

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)

7,045,530

27.26

Class B common stock^(d)

2,838,969

27.45

9,884,499

$
1,130


	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)
July 1, 2021 – July 31, 2021
Class A common stock	968,421	$	36.14
Class B common stock	440,273	34.07
August 1, 2021 – August 31, 2021
Class A common stock	1,728,556	37.00
Class B common stock	935,236	34.19
September 1, 2021 – September 30, 2021
Class A common stock	2,043,556	37.22
Class B common stock	820,198	34.17
Total
Class A common stock	4,740,533	36.92
Class B common stock	2,195,707	34.16
	6,936,240			$	2,150

^(a)


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

⁽^c⁾	~~On November 6, 2019,~~ ~~the Company announced that its~~
(c)			The Company's Board of Directors ~~had~~(the "Board") has authorized a $4 billion stock repurchase program, ~~providing for~~under which the Company can repurchase ~~of $2 billion of the Company’s~~ Common Stock.The program has no time limit and may be modified, suspended or discontinued at any time.

⁽^d)

In connection with the stock repurchase program, the Company entered into two accelerated share repurchase (“ASR”) agreements to repurchase $154 million of Class A Common Stock and $66 million of Class B Common Stock in August 2020. In accordance with the ASR agreements, in August 2020, the Company paid a third-party financial institution $154 million and $66 million and received initial deliveries of approximately 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 each ASR agreement, at a price of $26.00 and $26.01 per share, respectively. Upon settlement of the ASR agreements in September 2020, the Company received final deliveries of approximately 0.9 million and 0.4 million shares of Class A Common Stock and Class B Common Stock, respectively. The final number of shares purchased under the ASR agreements was determined using a price of $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 terms of the ASR agreements less a discount applicable for the Class A Common Stock) (See Note 6—Stockholders’ Equity to the accompanying Unaudited Consolidated Financial Statements of FOX under the heading “Stock Repurchase Program” for more information).

In total, the Company repurchased approximately 107 million shares of Common Stock for ~~$270~~approximately $250 million during the three months ended September 30, ~~2020.~~

2021.

~~ITEM 3.~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

~~ITEM 4.~~

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

~~ITEM 5.~~

ITEM 5. OTHER INFORMATION

Not applicable

~~ITEM 6.~~

~~EXHIBITS~~

ITEM 6. EXHIBITS

(a) Exhibits.

~~(a)~~

~~Exhibits.~~

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 September 30, ~~2020~~2021 formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Unaudited Consolidated Statements of Operations for the three months ended September 30, ~~2020~~2021 and ~~2019;~~2020; (ii) Unaudited Consolidated Statements of Comprehensive Income for the three months ended September 30, ~~2020~~2021 and ~~2019;~~2020; (iii) Consolidated Balance Sheets as of September 30, ~~2020~~2021 (unaudited) and June 30, ~~2020~~2021 (audited); (iv) Unaudited Consolidated Statements of Cash Flows for the three months ended September 30, ~~2020~~2021 and ~~2019;~~ 2020; (v) Unaudited Consolidated Statements of Equity for the three months ended September 30, ~~2020~~2021 and ~~2019;~~2020; and (vi) Notes to the Unaudited Consolidated Financial Statements.*

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

*	~~Filed herewith.~~

**	~~Furnished herewith.~~

___________

* 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~~
		Fox Corporation (Registrant)

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

Date: November 3, 2021

~~Date: November 3, 2020~~

	Fair value measurements
	As of June 30, 2020
	Total			Level 1			Level 2		Level 3
	(in millions)
Assets
Investments in equity securities	$	531		$	531	^(a)	$	0	$	0
Liabilities
Other		(6	)		0			0		(6)	^(b)
Redeemable noncontrolling interests		(305	)		0			0		(305)	^(b)
Total	$	220		$	531		$	0	$	(311)

	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)
July 1, 2020 – July 31, 2020
Class A common stock		-	$	-
Class B common stock		-		-
August 1, 2020 – August 31, 2020
Class A common stock^(d)		5,821,538		27.23
Class B common stock^(d)		2,322,772		27.44
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)		7,045,530		27.26
Class B common stock^(d)		2,838,969		27.45
		9,884,499			$	1,130